UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

(Mark One)

OR

OR

OR

Commission file number: 001-34919

Kabushiki Kaisha Mitsui Sumitomo Financial Group

(Exact name of registrantRegistrant as specified in its charter)

SUMITOMO MITSUI FINANCIAL GROUP, INC.

(Translation of registrant’s name into English)

Haruyuki Nagata

1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan

Telephone: +81-3-3282-8111        Facsimile: +81-3-4333-9954

(Name, telephone, e-mail and/or facsimile number and address of company contact person)

Securities registered or to be registered pursuant to Section 12(b) of the Act:Act

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

At March 31, 2011,2013, the following shares of capital stock were outstanding: 1,414,055,625 shares of common stock (including 32,581,91460,179,376 shares of common stock held by the registrant and its consolidated subsidiaries and equity-method associates as treasury stock), and (2) 70,001 shares of first series Type 6 preferred stock..

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨x    No  x¨

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.    Yes  ¨    No  x

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing.filing:

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.    Item 17  ¨    Item 18  ¨

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x

TABLE OF CONTENTS

i

ii

CERTAIN DEFINED TERMS, CONVENTIONS AND

PRESENTATION OF FINANCIAL INFORMATION

As used in this annual report, unless the context otherwise requires, “SMFG,” the “Company,” “we,” “us,” “our” and similar terms refer to Sumitomo Mitsui Financial Group, Inc. as well as to its subsidiaries, as the context requires. References to the “Group” are to us and our subsidiaries and affiliates taken as a whole. “SMBC” and the “Bank”“the Bank” refer to Sumitomo Mitsui Banking Corporation or to Sumitomo Mitsui Banking Corporation and its consolidated subsidiaries taken as a whole, depending on the context. The Bank is our main subsidiary.

In this annual report, all of our financial information is presented on a consolidated basis, unless we state otherwise. As used in this annual report, “IFRS” means International Financial Reporting Standards as issued by the International Accounting Standards Boards or “IASB,”(“IASB”) and “Japanese GAAP” means accounting principles generally accepted in Japan. Our consolidated financial information in this annual report has been prepared in accordance with IFRS, except for the risk-weighted capital ratios, the segment results of operation and some other specifically identified information, which are prepared in accordance with Japanese banking regulations or Japanese GAAP. Unless otherwise stated or the context otherwise requires, all financial information contained in this annual report is expressed in Japanese yen.

Our fiscal year ends on March 31.

Unless otherwise specified or required by the context: references to “days” are to calendar days; references to “years” are to calendar years and to “fiscal years” are to our fiscal years ending on March 31; references to “$,” “dollars” and “U.S. dollars” are to United States dollars; references to “euros” and “€” are to the currency of those member states of the European Union which are participating in the European Economic and Monetary Union pursuant to the Treaty on European Union; references to “£” and “British poundpounds sterling” are to the currency of the United Kingdom; and references to “yen” and “¥” are to Japanese yen. Unless otherwise specified, when converting currencies into yen we use theour median exchange rates for buying and selling spot dollars, or other currencies, by telegraphic transfer against yen as determined byat the Bank on March 31, 2011.end of the relevant fiscal period.

Unless otherwise indicated, in this annual report, where information is presented in millions, billions or trillions of yen or thousands, millions or billions of dollars, amounts of less than one thousand, one million, one billion or one trillion, as the case may be, have been rounded. Accordingly, the total of figures presented in columns or otherwise may not equal the total of the individual items. All percentages have been rounded to the nearest percent, one-tenth of one percent or one-hundredth of one percent, as the case may be, exceptExcept for capital ratios, which have been truncated.truncated, percentage data, unless we state otherwise have been subject to rounding adjustments for the convenience of the reader.

We implemented a 100-for-1 stock split of shares of our common stock and adopted a unit share system effective on January 4, 2009, pursuant to which one hundred shares constitutes one unit of shares. The 100-for-1 stock split and the adoption of the unit share system do not apply to shares of our preferred stock. Numbers of shares of our common stock and per share information for our common stock, for example historical dividend information, in this annual report have been retroactively adjusted to reflect the 100-for-1 stock split effective on January 4, 2009.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This annual report contains statements that constitute “forward-looking statements” within the meaning of Section 21E of the U.S. Securities Exchange Act of 1934, as amended.amended (“Securities Exchange Act of 1934”). When included in this annual report, the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “probability,” “risk,” “project,” “should,” “seek,” “target,” “will” and similar expressions, among others, identify forward-looking statements. You can also identify forward-looking statements in the discussions of strategy, plans or intentions. Such statements, which include, but are not limited to, statements contained in “Item 3. Key Information—Risk Factors,” “Item 5. Operating and Financial Review and Prospects” and “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk,” reflect our current views with respect to future events and are inherently subject to risks, uncertainties and assumptions, including the risk factors described in this annual report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described here as anticipated, believed, estimated, expected or intended.

The U.S. Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking information to encourage companies to provide prospective information about themselves. We rely on this safe harbor in making these forward-looking statements.

Forward-looking statements are not guarantees of future performance and involve risks and uncertainties, and actual results may differ from those in the forward-looking statements as a result of various factors, and the differences may be material. Potential risks and uncertainties include, without limitation, the following:

Given these and other risks and uncertainties, you should not place undue reliance on forward-looking statements, which speak only as of the date of the filing of this annual report. We expressly disclaim any obligation to update or to announce publicly any revision to any of the forward-looking statements contained in this annual report to reflect any changes in events, conditions, circumstances or other developments upon which any such statement is based. The information contained in this annual report identifies important factors in addition to those referred to above that could cause differences in our actual results.

PART I

Not applicable.

Not applicable.

3.A.    SELECTED FINANCIAL DATA

Selected Financial Data

The following selected financial data as ofat and for each of the threefive fiscal years ended March 31, 2013, 2012, 2011, 2010 and 2009 have been derived from our consolidated financial statements included in this annual report.statements. You should read this data together with “Item 5. Operating and Financial Review and Prospects” and our consolidated financial statements included elsewhere in this annual report.

Exchange Rates

We maintain our accounts in yen. The following table sets forth for the indicated periods the median exchange rates for buying and selling spot dollars by telegraphic transfer against yen as determined by the Bank, expressed in Japanese yen per $1.00.

The median exchange rate quotation by the Bank for buying and selling spot dollars by telegraphic transfer against yen on July 15, 201110, 2013 was ¥79.15¥101.17 = $1.00.

These exchange rates are reference rates and are neither necessarily the rates used to calculate ratios nor the rates used to convert dollars to yen in the consolidated financial statements containedincluded elsewhere in this annual report.

3.B.    CAPITALIZATION AND INDEBTEDNESS

Not applicable.

3.C.    REASONS FOR THE OFFER AND USE OF PROCEEDS

Not applicable.

3.D.    RISK FACTORS

Investing in our securities involves risks. You should carefully consider the risks described below as well as all the other information in this annual report, including, but not limited to, our consolidated financial statements and related Notesnotes included elsewhere in this annual report and “Item 11. Quantitative and Qualitative Disclosures about Credit, Market and Other Risk.” Our business, operating results and financial condition could be adversely affected by any factors, including, but not limited to, those discussed below. The trading prices of our securities could also decline due to any of these factors including, but not limited to, those discussed below. Moreover, this annual report contains forward-looking statements that involve risks and uncertainties. Our actual results could also differ from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risks faced by us described below and elsewhere in this annual report. See “Cautionary Statement Regarding Forward-Looking Statements.” Forward-looking statements in this section are made only as of the filing date of this annual report.

Risks Related to the CurrentEconomic and Financial Environment

Our operationsWe may be adversely affected by the Great East Japan Earthquakeif Japanese and collateral events.global economic conditions and financial markets deteriorate.

On March 11, 2011, a magnitude 9.0 earthquake occurred off the eastern coastOur financial condition and results of operations are materially affected by general economic conditions and financial markets in Japan and was followed shortly thereafterforeign countries, which would be influenced by a large tsunami that struck a vast swaththe changes of Japan’s Pacific coast. The earthquakevarious factors such as fiscal and tsunami resulted in catastrophic losses of lifemonetary policies, and property in Japan, particularly in the Tohoku region.

The earthquakelaws and collateral events have adversely affectedregulations. Those factors include, for example, the Japanese economy in general. Inconsumption tax rate. The Japanese consumption tax rate will be increased under the immediate aftermathrevision of the earthquakeConsumption Tax Act in August 2012 from the current rate of 5% to 8% in April 2014, and tsunami, there wasto 10% in October 2015, with a significant short-term negative impact on the economy. In additionprovision referring to the initial damage caused by the earthquake and tsunami, the damage to the nuclear power facilities in Fukushima resulted in electricity shortages and related rolling blackouts through muchpotential suspension of the Tohoku and Kanto regions, which include Tokyo. It is uncertain whether other significant collateral events will happen inconsumption tax rate increase after comprehensive review of the future. Because the effects from the nuclear accidents at the nuclear power facilities in Fukushima remain uncertain, public sentiment, such as concerns about the safety of products from the region, including agricultural products and seafood, could adversely affect the Japanese economy. On June 14, 2011,economic conditions by the Government of Japan, approvedthrough economic indicators such as nominal and submitted a bill to the National Diet of Japan, or the Diet, laying out a compensation scheme for nuclear damages. If this bill is enacted, it would provide financial support to people affected by the nuclear accidentsreal economic growth rates and also provide support to electric power utilities subject to claims for consequential losses associated with the nuclear accidents, which would contribute to the stability of their operations as a result. Nevertheless, it is likely that instability in the Japanese economy will remain until the full extent of the damage from the earthquake and collateral events can be adequately assessed.

While we did not suffer severe direct losses of employees or property as a result of the earthquake, the initial and collateral effects on corporate customers with headquarters or operations in the Tohoku region may indirectly affect us in the near term. Moreover, we recently increased and we may be required to, or choose to, provide new or additional financing to customers who may incur unexpected liabilities, have difficulty in the future in continuing operations, encounter difficulties, or need to devote significant resources to repairing their infrastructure, as a result of the earthquake and subsequent collateral events. It is uncertain whether our current or any future loans to such borrowers will benefit, directly or indirectly, from any government guarantees or other government support measures that may be enacted in response to the Great East Japan Earthquake. We may also record increases in our allowance for loan losses as a result of the adverse impact on the financial condition of our obligors, decreases in the value of mortgaged property in the affected regions, and decreases in the value of our equity securities portfolio. The effects of the earthquake and subsequent collateral events on the overall Japanese economy have adversely affected and may continue to adversely affect our business, financial condition and operating results. For further information on our operating environment and operations after the earthquake, see “Item 5. Operating and Financial Review and Prospects.”

Recent economic recovery may be fragile and may not be sustainable, and governmental actions to stabilize the financial markets and stimulate the economy may not achieve the intended effects.

Although there have been signs of economic recovery in Japan, the United States and other major economies, partially attributable to the effects of various government economic stimulus efforts, this recovery may be fragile. The sustainability of the recovery is uncertain, particularly as the effects of these various government stimulus programs subside. Without further government action, the recovery may not continue owing to deflationary pressures and other negative factors. Concerns about European economies, triggered by uncertainty as to the ability of certain European countries to repay their sovereign debt, have caused unstable market conditions. Geopoliticalprice trends. Furthermore, geopolitical instability in various parts of the world, including in North Africa, the Middle East and Asia, could also contribute to economic instability in those and other regions.regions and that could affect Japanese and global economic conditions.

In Japan,The deterioration of Japanese and global economic conditions, or financial market turmoil, could result in response to the financial instability affecting banking systems and financial markets as well as persistent vulnerabilities in investment banks and other financial institutions, in May 2009, the Diet approved a supplemental budget of ¥13.9 trillion, and the Government of Japan, led by the Democratic Party of Japan, in

August and October 2010 announced additional economic stimulus measures and measures to counter the yen’s appreciation against other currencies. With regard to monetary policy, the Bank of Japan, or the BOJ, from April 2010 has been providing liquidity through funds-supplying operations and loan programs against pooled collateral. In June 2010, the BOJ announced a fund-provisioning measure to strengthen the foundations for economic growth. In addition, on October 5, 2010, the BOJ lowered its uncollateralized overnight call rate target to a range of 0% to 0.1% and on March 14, 2011 announced that it would expand its quantitative easing program with a ¥10.0 trillion increase in its asset purchase program.

However, unemployment in Japan has remained at a relatively high level since the spring of 2009, and chronic unemployment could negatively affect consumer confidence, private consumption and economic activity. There also have been a number of corporate bankruptcies in Japan, particularly among companies directly affected by weak domestic demand. In addition, a persistently strong yen against currencies such as the U.S. dollar has begun to produce deflation and may negatively affect corporate earnings and exports, all of which could hamper economic recovery. The outlook for the Japanese economy is uncertain, and recovery may be delayed due to the impact of the strong yen. The resulting economic pressure on Japanese consumers and businesses, including increases in delinquencies and default rates, a general lack of confidence in the financial markets and fears of a further worsening of the economy could adversely affect our business, financial conditionliquidity and operating results.

Our liquidity could be adversely affected by actual or perceived weaknesses in our businesses and by factors we cannot control, such as a general decline in the level of business activity in the financial services sector.

We need liquidity to pay our operating expenses, pay interest on and principal of debt and dividends on capital stock, maintain our lending activities and meet deposit withdrawals. Adverse market and economic conditions, in the domestic and global economies may limit or adversely affect our access to liquidity required to operate our business. If our counterparties or the market are reluctant to finance our operations due to actual or perceived weaknesses in our businesses as a result of large losses, changesan increase in our credit ratings, a general declinecosts, and an increase in the levelimpairment of business activity in the financial services sector, or other factors, we may be unable to meet our payment obligations when they become due or only be able to meet them with funding obtained on unfavorable terms. Circumstances unrelated to our businessesinvestment securities and, outside our control, such as, but not limited to, adverse economic conditions, disruptions in the financial markets, or negative developments concerning other financial institutions perceived to be comparable to us, may also limit or adversely affect our ability to replace maturing liabilities in a timely manner. Without sufficient liquidity, we will be forced to curtail our operations and our business, and our operating results and financial condition could be adversely affected.

We may incur further losses as a result, of financial difficulties of other financial institutions in the banking environment.

We regularly execute transactions with counterparties in the financial services industry. Many of these transactions expose us to credit risk in the event of deterioration of credit worthiness of a counterparty or client. With respect to secured transactions, our credit risk may be exacerbated when the collateral cannot be foreclosed on or is liquidated at prices not sufficient to recover the full amount of the loan or other exposure due to us. Losses from or impairments to the carrying value of our investments in and loans to financial institutions could materially and adversely affect our business, financial condition and results of operations. We may also be requested to participate in providing assistance to distressed financial institutions that are not our consolidated subsidiaries. In addition, if the funds collected by the Deposit Insurance Corporation of Japan, or DIC, are insufficient to insure the deposits of failed Japanese banks, the insurance premiums that we pay to the DIC will likely be increased, which could adversely affect our business and operating results.

Risks Related to Our Business

Failure to satisfy capital adequacy requirements could constrain our and the Bank’s operations.

We and the Bank are subject to capital adequacy requirements established by the Financial Services Agency of Japan (“FSA”). The FSA has promulgated new capital adequacy requirements, which are being phased in from March 2013 to March 2019. The new requirements reflect the principal risk-weighted capital measures of the Basel III rules text published by the Basel Committee on Banking Supervision (“BCBS”) in December 2010. Under the new requirements, both the quality and quantity of the risk-weighted capital base are increased.

With respect to the quality of the capital base, certain capital instruments, including existing preferred securities and subordinated debt, are eligible for inclusion as Tier 1 capital or Tier 2 capital only for the phase out period. Furthermore, deferred tax assets that arise from timing differences will be recognized as part of the common equity component of Tier 1, with recognition capped at 10% of the bank’s common equity component under certain conditions, while deferred tax assets that arise from net loss carry forwards will be deducted from the common equity component of Tier 1.

With respect to the quantity of the capital base, the minimum Common Equity Tier 1 risk-weighted capital ratio applicable to us and the Bank will increase incrementally beginning in March 2013 to 4.5% in March 2015. Moreover, we and the Bank will be required to hold a capital conservation buffer of 2.5% to withstand future periods of stress, and failure to maintain capital at the full buffer levels will result in restrictions on bonuses and capital distributions. The capital conservation buffer will be phased in from March 2016 to March 2019. As a result, the total minimum Common Equity Tier 1 risk-weighted capital ratio will be increased to 7%, and the total minimum risk-weighted capital ratio will be increased to 10.5%. At March 31, 2013, on a consolidated basis, our total risk-weighted capital ratio was 14.71% compared to the minimum required total risk-weighted capital ratio of 8.0%. Out of our total risk-weighted capital ratio, our Tier 1 risk-weighted capital ratio was 10.93%, including 9.38% of Common Equity Tier 1 risk-weighted capital ratio, compared to the minimum required ratios of 4.5% and 3.5%, respectively.

In addition, on November 1, 2012, we and other organizations were identified by the Financial Stability Board (“FSB”) as Global Systemically Important Financial Institutions (“G-SIFIs”). The list of G-SIFIs is updated each year in November, and the requirements for additional loss absorption capacity above the Basel III minimum requirement will apply from 2016, initially to those financial institutions identified in November 2014 as G-SIFIs.

Our and the Bank’s capital ratios could decline as a result of decreases in Tier 1 and Tier 2 capital or increases in risk-weighted assets. The following circumstances, among others, could reduce our risk-weighted capital ratio and that of the Bank:

We and the Bank have adopted the advanced internal rating-based (“IRB”) approach for measuring exposure to credit risk and the advanced measurement approach (“AMA”) to measure exposure to operational risk. If the FSA revokes its approval of such implementation or otherwise changes its approach to measure capital adequacy ratios, our and the Bank’s ability to maintain capital at the required levels may be adversely affected.

If our capital ratios fall below required levels, the FSA may require us to take a variety of corrective actions, including withdrawal from all international operations or suspension of all or part of our and the Bank’s operations, which may indirectly affect our or the Bank’s ability to fulfill our and the Bank’s contractual obligations or may result in restrictions on our and the Bank’s businesses. In addition, some of the Bank’s domestic and overseas subsidiaries are also subject to local capital ratio requirements. Failure of those subsidiaries to meet local requirements may result in administrative actions or sanctions imposed by local regulatory authorities.

Future declines of securities prices on Japanese stock markets or other global markets decline in the future, we maycould cause us to experience impairment losses and unrealized losses on our equity securities portfolio, which could negatively affect our financial condition, operating results of operations and regulatory capital position.

The reported value of our available-for-sale equity instruments which accounted for 2.4%2.7% of our total assets as ofat March 31, 2011, and2013, approximately 89.7%87.8% of which were Japanese equity securities,securities. This value depends mainly on prices of the instruments in the stock market. A listed equity security is impaired primarily based on its market price. If we conclude that a particular security is impaired, we calculate the impairment loss based on the market price of that security at the end of the relevant fiscal period. Declines in the Japanese stock markets or other global markets could result in further losses from impairment of the securities in our equity securities portfolio or sales of these securities, adversely affecting our results of operations and financial condition.

Our regulatory capital position and that of the Bank depend in part on the fair value of our equity securities portfolio, since 45% of unrealized gains are counted as Tier II capital, while unrealized losses reduce net assets and Tier I capital.portfolio. Substantial declines in the Japanese stock markets or other global markets would negatively affect our capital position and the Bank’s capital position of the Bank,positions, and limit the Bank’s ability to make distributions to us.

We may further reduce our holdings of equity securities in order to reduce financial risks. Any disposal by us of equity holdings inof our customers’ shares could adversely affect our relationships with those customers.

We may not be able to satisfy capital adequacy requirements, whichChanges in the levels or volatility of market rates or prices could constrainadversely affect our financial condition and the Bank’sresults of operations.

We engage in trading and the Bank are subject to capital adequacy requirements establishedinvesting activities dealing with various kinds of financial instruments such as bonds, equities, currencies, derivatives and funds. Our financial condition and results of operations could be adversely affected by the Financial Services Agencyactual changes or volatility in interest rates, foreign exchange rates and market prices of Japan, or FSA. Asother investment securities. For example, we have substantial investments in debt securities. In particular, Japanese government bonds represent a significant part of our fixed income portfolio. At March 31, 2011,2013, we had ¥20 trillion of Japanese government bonds classified as available-for-sale financial assets, which accounted for

approximately 13.2% of our risk-weighted consolidated capital ratio was 16.63% compared tototal assets. Increases in interest rates could substantially decrease the minimum required risk-weighted capital ratiovalue of 8.0%,our fixed income portfolio, and our Tier I risk-weighted capital ratio was 12.47% compared to the minimum required Tier I risk-weighted capital ratio of 4.0%. Our and the Bank’s capital ratios could decline as a result of decreases in Tier I and Tier II capital or increases in risk-weighted assets. The following circumstances, among others, could reduce our risk-weighted capital ratio and that of the Bank:

Furthermore, our Tier II capital cannot exceed our Tier I capital. If our Tier I capital is reduced, then amounts that may be credited as Tier II capital may be reduced as well because at least half deterioration of the financial conditions of our capital must consist of Tier I capital. Failure by us or the Bank to maintain the minimum risk-weighted capital ratios may result in administrative actions or sanctions, which may indirectly affectcustomers could increase our or the Bank’s ability to fulfill our and the Bank’s contractual obligations or may result in restrictions on our and the Bank’s businesses.

We and the Bank have adopted the advanced internal rating based, or IRB, approach for measuring exposure to credit risk and the advanced measurement approach, or AMA, to measure exposure to operational risk. If the FSA revokes its approval of such implementation or otherwise changes its approach to measure the capital adequacy ratios, our and the Bank’s ability to maintain capital at the required levels may be adversely affected.

FSA regulations limit the amount of deferred tax assets which may be included in our and the Bank’s regulatory capital. The amount of net deferred tax assets established pursuant to Japanese GAAP that major banks may include in regulatory capital for capital ratio purposes is limited to 20% of Tier I capital. Where net

deferred tax assets of a bank exceed this 20% limit, Tier I capital must be adjusted by deducting the amount in excess of the limit. If the percentages of our capital that consist of net deferred tax assets increase, or if the limits are further decreased, these limits could adversely affect our capital ratios. Furthermore, under the new Basel III rules text published by the Basel Committee on Banking Supervision, or the Basel Committee, on December 16, 2010, deferred tax assets that arise from timing differences will be recognized as part of the common equity component of Tier I, with recognition capped at 10% of the bank’s common equity component under certain conditions, while deferred tax assets that arise from net loss carry forwards will be deducted from the common equity component of Tier I. We anticipate that the FSA will change its capital adequacy guidelines to reflect the Basel Committee’s package of reforms, which will adversely affect our capital ratios including the change in treatment of deferred tax assets mentioned above.

If our capital ratios fall below required levels, the FSA may require us to take a variety of corrective actions, including withdrawal from all international operations or suspension of all or part of our and the Bank’s operations. In addition, some of the Bank’s domestic and overseas subsidiaries are also subject to local capital ratio requirements. Failure of those subsidiaries to meet local requirements may result in administrative actions or sanctions imposed by local regulatory authorities.

Credit costs related to non-performing loans may increase if our borrowers do not repay their loans in a timely manner.costs.

We have substantial exposure to corporate customers in the following sectors: manufacturing, real estate, rental and leasing, wholesale and retail, services and transportation, communications and public enterprises, including electric utilities. Our non-performing loans (“NPLs”) and our credit costs for corporate and individual customers may increase significantly if:

We have substantial exposure to corporate customers in the following sectors: real estate and guarantees,goods rental and leasing, manufacturing, wholesale and retail, transportation, communications and public enterprises, and services, including electric utilities, and to individual customers mainly through housing loans. The financial conditions of those customers may be subject to changes in the industry-specific economic conditions as well as general economic and businessconditions. In addition, adverse region-specific economic conditions on whichcould worsen our customers’ financial conditions or could decrease the value of our collateral provided to us in such regions. As a result, we may be required to record increases in our allowance for loan losses is based fail to provide an accurate estimate of actual future incurred losses.

We have exposure to housing loans at the Bank and through other subsidiaries. The continuation of the difficult employment environment or a further decline in residential property values could cause us to incur increased credit costs due to rising defaults by individual borrowers or a deterioration in the credit profile of borrowers.

Moreover, the Great East Japan Earthquake also led to an increase in credit costs due to a worsening of the financial condition of affected individuals and companies. See the risk factor captioned “Our operations may be adversely affected by the Great East Japan Earthquake and collateral events” for further details. Changes in law or government policies that have an adverse impact on the rights of creditors could also cause us to incur increased credit costs. For certain borrowers, we may choose to engage in debt-for-equity swaps or provide partial debt write-offs, provide additional financing or provide other forms of assistance as an alternative to exercising our full legal rights as a creditor if we believe that doing so may increase our ultimate abilityrecoverable amount of the loan. We may be required to, recoveror choose to, provide new or additional financing to customers who may incur unexpected liabilities, have difficulty in the future in continuing operations, encounter difficulties or need to devote significant resources to repair their infrastructures, as a result of natural disasters or other calamities.

In addition, changes in laws or government policies may have an adverse impact on the loan.rights of creditors. For example, the Government of Japan has provided or may provide in the future government guarantees and other government support measures in response to the financial crisis or other unexpected incidents such as the Great East Japan Earthquake of March 2011 and collateral events. Even if our current or future loans to borrowers have received or will receive any government support measures, it is unclear to what extent those loans will benefit, directly or indirectly, from the current or any future government guarantees or support measures.

In addition, our NPLs may increase and there may be additional credit costs if we fail to accurately estimate the incurred losses in our loan portfolio. These estimates require difficult, subjective and complex judgments such as credit evaluation of our borrowers, valuation of collateral and forecasts of economic conditions.

The ratio of impaired loans and advances to the total loans and advances, both net of allowance for loan losses, were 1.8%, 1.6%1.9% and 1.5% as of1.8% at March 31, 2011, 20102013, 2012 and 2009,2011, respectively. For further information, see “Item 5.A. Operating Results—Loans and Advances.”

A significant downgrade of our credit ratings could have a negative effect on us and certain of our current ratings are under review for possible downgrade.us.

At the date of this annual report, SMFG has the issuer credit ratings of A/A-1 from Standard & Poor’s Ratings Japan K.K., (“S&P”), and the long-term foreign and local currency issuer default ratings (“IDRs”) of A- and the short-term foreign and local currency IDRs of F1 from Fitch Ratings Japan Limited (“Fitch”). There can be no assurance that these ratings will be maintained.

On May 31, 2011, Moody’s22, 2012, Fitch announced that it had placeddowngraded the Government of Japan’s Aa2long-term foreign and local and foreign currency bond ratings on review for possible downgrade.IDRs to A+ with negative outlook. On the same date, Moody’s also placed on review for possible downgradeJuly 20, 2012, Fitch downgraded by one notch the long-term debt ratingsforeign and local currency IDRs of allthe major Japanese banks,banking groups and their subsidiaries, including SMFG and the Bank’s long-term debt ratings, due to fiscal pressures onBank, in connection with the Government of Japan that might constrain its ability to support Japan’s banking system. Accordingly, a downgrade of such ratings is possible at any time. sovereign downgrade.

A material downgrade of our credit ratings may have various effects including, but not limited to, the following:

Any of these or other effects of a downgrade of our credit ratings could have a negative impact on the profitability of our treasury and other operations, and could adversely affect our regulatory capital position, financial condition and results of operations. For more information about our credit ratings, see “Item 5.B. Liquidity and Capital Resources.”

We face significant challenges in achieving the goals of our business strategy, and our business may not be successful.

In May 2011, we and the Bank launched a new medium-term management plan for the coming three fiscal years. Although wethrough March 2014. We believe that we have targeted appropriate business areas,areas. However, our initiatives to offer new products and services and to increase sales of our existing products and services may not succeed, if current market conditions do not stabilize, market opportunities develop more slowly than expected, our initiatives have less potential than we envisioned originally or the profitability of these products and services is undermined by competitive pressures. Consequently, we may be unable to achieve or maintain profitability in our targeted business areas.

In order to implement our business strategy successfully, we need to hire and train qualified personnel continuously and in a proactive manner, as well as to attract and retain employees with professional experience and specialized product knowledge. However, we face competition from other commercial banks, investment banks, consumer finance companies and other financial services providers in hiring highly competent employees. There can be no assurance that we will succeed in attracting, integrating and retaining appropriately qualified personnel.

Our financial condition and results of operations could be adversely affected by changes in the levels or volatility of market rates or prices.

Our financial condition and results of operations could be adversely affected by changes in interest rates, foreign exchange rates and market prices of investment securities. We have substantial investments in debt securities. In particular, Japanese government bonds represent a significant part of our fixed income portfolio. As of March 31, 2011, we had ¥20 trillion of Japanese government bonds classified as available-for-sale securities, which accounted for approximately 58.3% of our overall investment securities portfolio and 14.8% of our total assets. Increases in interest rates could substantially decrease the value of our fixed income portfolio, and any unexpected change in yield curves could adversely affect the value of our bond and interest rate derivative positions, resulting in lower-than-expected revenues from trading and investment activities. Market volatility may also result in significant unrealized losses or impairment losses on such instruments. Furthermore, ratings downgrades of investment securities by major rating agencies may also cause declines in the value of our securities portfolio.

We are exposed to new or increased risks as we expand our businesses, the range of our products and services, and the geographic scope of our business.businesses overseas.

We are expandingAs part of our distribution channelsbusiness strategies we have expanded and may continue to expand our businesses or our range of products and services beyond our traditionalcore business, commercial banking businessbanking. This could expose us to other servicesnew risks, such as part of our business strategy. Accordingly, we will need to develop, investadverse regulatory changes, more competition or deterioration in and implement systems to manage newthe operating environments that affect those businesses, products and services and distribution channels. We may incur expenses necessary to address regulatory requirements that enhance consumer protections, including for improvements to information technology systems and employee training.services. Some of thethose risks associated with our new services and businesses willcould be types with which we have no or only limited experience. As a result, our risk management systems may prove to be insufficient and may not be effective in all cases or to the degree required.

In particular,accordance with our strategy to further increase our presence in the Bank’s acquisition of Nikko Cordial Securities Inc., which changed its trade nameinternational financial markets, we may continue to SMBC Nikko Securities Inc. on April 1, 2011, has significantly expanded our exposure to the domestic retail securities business and the risks that such business entails, including intense competition as well as regulatory and compliance risks. Through the acquisition, we obtained: (i) the entire business of the former Nikko Cordial Securities, including the domestic retail and M&A advisory businesses; (ii) certain businesses of the former Nikko Citigroup, including the domestic debt and equity underwriting businesses; (iii) other related subsidiaries and associates; (iv) strategic shareholdings; and (v) other assets including the “Nikko” brand and related trademarks. Along with strengthening SMBC Nikko Securities’ position as a securities and investment banking company that can provide both retail and full-line wholesale securities services, including overseas operations, we are further exposed to the risks associated with the securities business.

As we expand the scale of our overseas assetsbusinesses, especially in emerging economies, notably Asian countries and businesses, we have entered into several investments and alliances with commercial banking institutions, particularly in Asia. Thisregions. The expansion of our overseas business and our strategy to further improve our presence in the international marketsbusinesses may further increase our exposure to risks of adverse developments in foreign economies and markets, including interest rate and foreign exchange rate risk, and regulatory risk and political risk. Our overseas expansion also exposes us to the compliance risks and the credit and market risks specific to the countries and regions in which we operate, including the risk of deteriorating conditions in specific national or regional economies or in the credit profile of overseas borrowers.

We may experience impairment losses on goodwillFailure of our business strategies through our subsidiaries, affiliates and investments in associates, whichother business alliance partners could negatively affect our financial condition and operating results.results of operations, including impairment losses on goodwill or investments.

WeAligned with our business strategies, we have entered intomade and may undertake acquisition of a number of business alliances with related companiessubsidiary, investments in affiliates and other financial institutions, including with entities involved in the securities, consumer finance, credit card, leasingbusiness alliance partners, and asset management businesses, and we may enter into additional business alliances and make additional investments and acquisitions in the future.reorganization within our group. It is uncertain whether we will receive the expected benefits from those business strategies, due to any adverse regulatory changes, worsening of economic conditions, increased competition or other factors that may negatively affect the related business activities. Furthermore, unanticipated costs and liabilities may be incurred in connection with those business strategies, including liabilities from the claims related to the businesses prior to our business alliances. If our strategy with respect to an existing or future alliance changes or is unsuccessful,alliances, and cost from actions by regulatory authorities.

When we acquire a subsidiary, we may decide or be required to terminate the alliance.

We recognize some goodwill and intangible assets mainly in the securities segment and the leasing segment.assets. Impairment losses on goodwill or intangible assets in connection with acquisitions must be recognized when the recoverable amount of the goodwill or intangible assets of the business is lower than the carrying amount at the time of impairment testing, which is performed annually or whenever there is an indication that the goodwill or intangible assets may be impaired.

We account for some of our alliance investments in affiliates under the equity method. For the fiscal year ended March 31, 2011, we recognizedTherefore, net losses under the equity method in connection with some of these alliance investments. Net lossesincurred by equity method investees may cause us to recognize further losses inrecord our share of the future.net losses. Furthermore, we may lose the capital which we have invested in business alliances or may incur impairment losses on securities acquired in such alliances, and we may incur credit costs resulting from our credit exposure to business alliance partners if they fail or do not perform as expected.

alliances. We may also be required under contractual or other arrangements to provide financial support, including credit support and equity investments, to business alliance partners in the future. Furthermore,Additionally, we may also incur unanticipatedcredit costs and liabilities in connection with business alliances, including claims by customers or personnel of the businesses acquired priorfrom our credit exposure to business alliances, and actions by regulatory authorities.such partners.

Our consumer finance strategy exposes usWe are exposed to the industry specific risks in that industry.

We have strategic alliances with companies engaging inof the consumer finance business and have substantial exposure to the Japanese consumer finance industry through their businesses, some of which are our consolidated subsidiaries. We have substantial loans outstanding to consumer finance companies, including Promise Co., Ltd. In addition to our exposure through loans, we have a 22% equity investment in Promise and direct investments in other consumer finance companies, including the Bank’s 51% stake in ORIX Credit Corporation, a consumer finance provider with a high market share among premium card loan providers.

Our strategic alliances and joint businesses with consumer finance companies have been and will continue to be adversely affected by changes in regulations in the consumer finance industry.

Changes in the legal environment and market conditions have severely adversely affected the business performance of consumer lending and credit card companies. We have exposures to the risks specific to the consumer finance companies.industry through our subsidiaries, including Cedyna Financial Corporation (“Cedyna”) and SMBC Consumer financeFinance Co., Ltd. (“SMBC Consumer Finance”).

Consumer lending and credit card companies had offered unsecured personal loans, which included so-called “gray zone” interest on loans in excess of the maximum rate prescribed by the Interest Rate Restriction Act (ranging from 15% to 20%) up to the 29.2% maximum rate permitted under the Act Regulating the Receipt of Contributions, Receipt of Deposits and Interest Rates or the (“Contributions Act.Act”). However, as a result of unfavorable court decisions unfavorable to those companies, claims for refunds of amounts paid in excess of the applicable maximum allowed rate by the Interest Rate Restriction Act have increased substantially. While PromiseAlthough Cedyna, SMBC Consumer Finance and other major companies in the consumer finance industrysubsidiaries have each recorded provisionsa provision for claims for refunds of gray zone interest repayment, these provisionson loans, we may be required to recognize additional losses if such provisions are determined to be insufficient. The amendments

Amendments to laws regulating moneylenders, which were promulgated in December 2006 and which became fully effective in June 2010, increased the authority of government regulators, prohibited gray zone interest and introduced an upper limit on aggregate credit extensions to an individual by moneylenders at one-third of the borrower’s annual income. After the promulgation of such amendments, PromiseCedyna, SMBC Consumer Finance and other consumer finance companies engaged in related business reduced their interest rates on loans in preparation for the prohibition of gray zone interest. As a consequence, margins earned by consumer financethose companies, as well as the amounts of loans extended, have decreased. Promise and our other consumer finance subsidiaries and associates are engaged in efforts to restructure their consumer finance businesses and diversify their profit structure. We may be required to provide financial support through additional loans and equity investments. However, such efforts may not be successful and could adversely affect their operations and may cause us to recognize additional losses.

Our strategic alliances with and investments in credit card companies expose usInability to risks in that industry.

Economic andgenerate sufficient future taxable profits or adverse changes to tax laws, regulatory trends in Japan have adversely affected the profitability of credit card companies that operate in Japan. The uncertain economic environment increases caution among consumers and contributes to a reduction in the volume of credit card transactions. Recent regulatory changes in Japan have also affected the operations and profitability of companies in the credit card industry.

The revisions to the Installment Sales Act enacted in June 2008, most of which took effect in December 2009, imposed more stringent regulations on credit card companies, including an expanded scope of regulation, measures to prevent inappropriate extensions of credit and measures to prevent excessive lending. These and subsequent revisions to the Installment Sales Act in December 2010 have had and continue to have an adverse impact on companies in the credit card industry.

Amendments to laws regulating moneylenders promulgated in December 2006 which introduced interest and credit extension limits have had and continue torequirements or accounting standards could have a negative effectimpact on the profitabilityrecoverability of certain credit

card companies, including Cedyna Financial Corporation, or Cedyna. Cedyna is exposed to liabilities related to the repayment of gray zone interest and an additional increase in claims for repayment could result in further losses.

If these economic and regulatory trends continue or accelerate, our investments in credit card companies could materially and adversely affect our capital adequacy ratios, financial condition and results of operations. In addition, we may be required to provide financial support to these companies through additional loans or equity investments. However, such actions may not be successful and may cause us to recognize additional losses.

Deferreddeferred tax assets may decrease due to a reduction of our expected future taxable income.assets.

We recognize deferred tax assets relating to tax losses carried forward and deductible temporary differences only to the extent that it is probable that future taxable profit will be available against which the tax losses carried forward and the temporary differences can be utilized. Net deferred tax assets amounted to ¥1,001¥274 billion and ¥1,097¥563 billion as ofat March 31, 20112013 and 2010,2012, respectively. If our current or future financial circumstances indicate that it is no longer probable that ourNet deferred tax assets will be utilized, we will assess themare quantified on the basis of current tax rates and accounting standards and are subject to change as a result of changes to future tax rates or the rules for realizabilitycomputing taxable profits and allowable losses. Failure to generate sufficient future taxable profits or changes in tax laws or accounting standards may reduce them as necessary. Thisour estimated recoverable amount of net deferred tax assets. Such a reduction could have an adverse effect on our financial condition and results of operations.

Declines in actual returns on our plan assets or revised actuarial assumptions for retirement benefits may adversely affect our financial condition and results of operations.

The Bank and some of our subsidiaries have various defined benefit plans. We have experienced in the past, and may experience in the future, declines in actual returns on plan assets and changes in the discount rates and other actuarial assumptions. If actual returns on plan assets are lower than expected returns on plan assetsdecrease, or if we revise the discount rates and other assumptions, wethe deficit of the impacted defined benefit plan may incur actuarial losses which may have an adverse effect onincrease and adversely affect our financial condition and results of operations. Unrecognized actuarial losses may be recognized as losses in future periods. Because approximately half of our plan assets are composed of equity instruments, the plan assets are greatly affected by volatility in marketthe prices forof equity securities. Substantial declines in sharethe prices for equity securities onpublicly traded Japanese stock marketsstocks would negatively affect our plan assets and unrecognized losses arising from such declines may be recognized as losses in future periods.assets. For further information, see Note 23 “Retirement Benefits” to our consolidated financial statements included elsewhere in this annual report.

Our business relies on our information technology systems, and their failure could harm our relationships with customers or adversely affect our provision of services to customers.

In all aspects of our business, we use information technology systems to deliver services to and execute transactions on behalf of our customers as well as for back-office operations. We therefore depend on the capacity and reliability of the electronic and information technology systems supporting our operations. We may encounter service disruptions in the future, owing to failures of these information technology systems. Our information technology systems are subject to damage or incapacitation as a result of quality problems, human error,errors, natural disasters, power loss,losses, sabotage, computer viruses, acts of terrorism and similar events. Our information technology centers are subject to earthquake risk. While we have taken steps to protect our information in the information technology centerssystems from earthquake risk,those risks, including by establishing data recovery capability and functionality, these measures may not be sufficient. In addition, we may not be prepared to address all contingencies that could arise in the event of a major disruption of services. The failure to address such contingencies could harm our relationships with customers or adversely affect our provision of services to customers.

We handle personal information obtained from our individual and corporate customers in relation to our banking, securities, consumer lending, credit card consumer finance and other businesses. The systems we have implemented to protect the confidentiality of personal information, including those designed to meet the strict requirements of the

Act Concerningon the Protection of Personal Information (Act No. 57 of 2003, as amended), may not be effective in preventing disclosure of personal information by unauthorized access from a third party. Leakage of personal information could expose us to demands for compensation or lawsuits for ensuing economic losses or emotional distress, administrative actions or sanctions, additional expenses associated with making necessary changes to our systems and reputational harm. As a result, our business, financial condition and results of operations could be materially and adversely affected.

Our risk management policies and procedures may not adequately address unidentified or unanticipated risks.

We are exposed to a variety of operational, legal and regulatory risks throughout our organization. Management of these risks requires, among other things, policies and procedures to properly record and verify

large numbers of transactions and events. However, these policies and procedures may not be fully effective or sufficient. We have devoted significant resources to strengthening our risk management policies and procedures and expect to continue doing so in the future. Nevertheless, particularly in light of the continuing evolution of our operations and expansion into new areas, our policies and procedures designed to identify, monitor and manage risks may not be fully effective. Some of our methods of managing risks are based upon our use of observed historical market behavior and thus may not accurately predict future risks.

We are exposed to a variety of operational, legal and regulatory risks throughout our organization. Management of these risks requires, among other things, policies and procedures to properly record and verify large numbers of transactions and events. However, these policies and procedures may not be fully effective or sufficient. Violations of laws including the Japanese antitrust and fair trade laws by us or by the Bank may result in administrative sanctions under the Banking Act.sanctions. Furthermore, investigations, administrative actions or litigation could commence in relation to violations, which may involve costs including possibleand may result in deterioration of our reputation.

We may incur additional costs for implementing and maintaining effective internal controls.

In order to operate as a global financial institution, it is essential for us to have effective internal controls, corporate compliance functions, and accounting systems to manage our assets and operations.

The Financial Instruments and Exchange Act in Japan, or FIEA, requires the companies listed on the Japanese stock exchange to file, together with their annual securities reports required by FIEA, audited internal control reports assessing the effectiveness of their internal controls over financial reporting. We have established internal controls over financial reporting, as well as rules for evaluating those controls, in order to provide reasonable assurance of the reliability of our financial reporting and the preparation of financial statements. However, these controls may not prevent or detect errors. If we are unable to identify and resolve any significant defects or material weaknesses by the end of a particular fiscal year, we will need to report that fact in our annual securities report. If this occurs, our reputation may be damaged, which could lead to a decline in investor confidence in us.

Moreover, under section 404 of the U.S. Sarbanes-Oxley Act of 2002, which will apply to us by reason of our status as a reporting company to the U.S. Securities and Exchange Commission, or SEC, our management will be required to assess the effectiveness of our internal control over financial reporting and disclose whether such internal controls are effective. Our accounting auditor also will have to conduct an audit to evaluate and then render an opinion on the effectiveness of our internal control over financial reporting. The requirements of section 404 will first apply to our annual report on Form 20-F for the fiscal year ending March 31, 2012.

Designing and implementing an effective system of internal control capable of monitoring and managing our business and operations requires significant management and human resources and considerable costs. If we identify any material weaknesses in our internal control system, we may incur significant additional costs for remediating such weaknesses. In addition, if we adopt a new accounting system, we may be required to incur significant additional costs, which may materially adversely affect our financial condition and results of operations.

Our business operations are exposed to risks of natural disasters, terrorism, pandemics and calamities.

Our business operations are subject to the risks of natural disasters, terrorism, pandemics, blackouts, and other calamities and geopolitical risks, any of which could impair our business operations. Despite our preparation of operation manuals and other backup measures and procedures, a calamity could cause us to suspend operations and could adversely affect our operations and financial condition.

Fraud or other misconduct by directors, officers and employees or third parties could subject us to losses and regulatory sanctions.

We are exposed to potential losses resulting from fraud, misconduct and other misconductunlawful behavior by ourdirectors, officers and employees. OurDirectors, officers and employees may bind us to transactions that exceed authorized limits or present unacceptable risks, hide from us and from our customers unauthorized activities, improperly use confidential information or otherwise abuse customer confidences. Third parties may engage in fraudulent activities, including fraudulent use of bank accounts or the use of false identities to open accounts for money laundering, tax evasion or other illegal purposes. Third parties could also use stolen or forged ATM cards or engage in credit card fraud, and we may be required to indemnify victims of such fraud for related losses. In the broad range of businesses in which we engage, fraud, misconduct and other misconductunlawful behavior are difficult to prevent or detect,detect. In addition, with or without actual fraud, misconduct and other unlawful behavior by directors, officers and employees, investigations, administrative actions or litigation could commence in relation to them. Furthermore, we may not be able to recover the losses caused by these activities.activities, including possible deterioration of our reputation.

Transactions with counterparties in Iran and other countries designated by the U.S. Department of State as state sponsors of terrorism or that are subject to other U.S. economic sanctions may lead some potential customers and investors to avoid doing business with us or investing in our securities or may limit our business operations.

U.S. law generally prohibits or substantially restricts U.S. persons from doing business with countries designated by the U.S. Department of State as state sponsors of terrorism or the (“Designated Countries,Countries”), which currently are Cuba, Iran, Sudan and Syria. Under U.S. law, there are similar prohibitions or restrictions withon countries that are the subject toof other U.S. economic sanctions administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control or OFAC,(“OFAC”) or other agencies collectively(collectively with the Designated Countries, the Restricted Countries.“Restricted Countries”). We maintain policies and proceduresa Group-wide policy designed to ensure compliance with relevantapplicable U.S. laws and regulations applicable to U.S. personsregulations. This policy, which covers the Bank and our policies include an internal credit policy whichbanking subsidiaries that provide financial services globally, prohibits the new extensionsextension of credit to Iranian entities. Our non-U.S. offices engage in transactions relating to the Restricted Countries on a limited basis and in compliance with applicable laws and regulations, includingregulations. These activities include remittance of Japanese yen with respect to our customers’ export or import transactions, maintenance of correspondent banking accounts and inter-bank money market transactions with Iranian banks, including those which OFAC identifies as “Specially Designated Nationals.”the Central Bank of Iran, and the payment of fees in Japanese yen to certain Iranian Banks in connection with performance bonds issued in the past by the Bank through these Iranian banks related to our customers’ projects in Iran. In addition, we maintain a representative office in Iran that mainly performs an information-collecting function.

We do not believe that our operations relating to the Restricted Countries materially affect our business, financial condition or results of operations. A limited number of the Bank’s transactions with Cuba, Iran, Sudan and certain other countries that are the subject toof U.S. economic sanctions were identified and voluntarily disclosed to OFAC. These transactions resulted from inadvertent operational errors or the lack of familiarity of some personnel of the Bank personnel with the requirements of the relevant regulations in the past.past, or from the inherent limitation on information about underlying transactions that can be obtained in the course of normal banking

operations. Since the discovery of these potential violations we have further strengthened our Group-wide OFAC compliance program in an effort to prevent the recurrence of such potential violations. We settled some of the voluntarily disclosed potential violations with OFAC while others remain unsettled. However, in light of the inadvertent nature of such potential violations and the degree to which our strengthened OFAC compliance program aims to mitigate the risk of potential violations, we do not believe that our settlement with OFAC, or any possible penalties that OFAC may impose with respect to the other potential violations that remain unsettled, will have a material impact on our reputation, financial condition or results of operations, or on the market prices forof our securities.

We are aware of initiatives by U.S. governmental entitiesstates and U.S. institutional investors, such as pension funds, to adopt laws, regulations or policies prohibiting transactions with or investment in, or requiring

divestment from, entities doingengaged in certain business with Iran and other Designated Countries. It is possible that such laws and initiatives may result in our being unableinability to enter into transactions with those entities that are subject to such prohibitions or to retain or acquire such entities as customers or investors in our securities.

In recent years, the U.S. Government has implemented a number of sanctions targeting non-U.S. companies that engage in certain Iran-related transactions. The Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010 (“CISADA”) may lead to the imposition of sanctions against non-U.S. financial institutions, such as us, if they are determined by the Secretary of the Treasury to have facilitated “significant transactions” or provided “significant financial services” for certain Iran-linked individuals or entities, or the Iranian Revolutionary Guard Corps. In addition, the National Defense Authorization Act for Fiscal Year 2012 (“2012 NDAA”) of December 31, 2011, Executive Order 13622 of July 30, 2012, and the Iran Threat Reduction and Syria Human Rights Act of 2012 (“ITRA”) of August 10, 2012 broadened the range of sanctionable Iran-related transactions. Further, under the Iran Freedom and Counter-Proliferation Act of 2012 (“IFCA”) and Executive Order 13645, wide-ranging sanctions against the energy, shipping, shipbuilding, and automotive sectors of Iran, as well as Iranian port operators and Iranian currency, became effective on July 1, 2013. For a description of the laws and Executive Orders described in this paragraph, see “Item 4.B. Business Overview—Regulations in United States—Laws Prohibiting Money Laundering and Terrorist Financing.”

The U.S. Secretary of State announced on March 20, 2012 that Japan was among a number of countries that had significantly reduced the volume of crude oil purchases from Iran, and that therefore the 2012 NDAA sanctions would not apply to Japanese financial institutions for a period of 180 days, which period may be renewed based on ongoing reductions in crude oil purchases from Iran. Japan’s exception under the 2012 NDAA was renewed on September 14, 2012 and again on March 13, 2013. The exception also exempts Japanese financial institutions from sanctions under certain provisions of Executive Order 13622, the IFCA, and Executive Order 13645. The exception applies only if the financial transactions conducted or facilitated by a Japanese financial institution are solely for trade in goods and services between Japan and Iran and any funds owed to Iran as a result of such trade are credited to an account in Japan and not repatriated to Iran. In addition, under Executive Order 13645, the exception applies only if the financial transaction is for the purchase of petroleum or petroleum products from Iran. There is no guarantee that the U.S. Secretary of State will continue to renew this waiver with respect to Japanese financial institutions.

The laws and Executive Orders referenced above or similar legislative or regulatory developments may further limit our business operations. If we were determined to have engaged in activities targeted by certain U.S. statutes or Executive Orders, we could lose our ability to open or maintain correspondent or payable-through accounts with U.S. financial institutions, among other potential sanctions. In addition, depending on sociopolitical developments, our reputation may suffer due to our association with the Designated Countries. The above circumstances could have a significant adverse effect on our business or the priceprices of our securities. In addition, the U.S. government has recently enacted legislation designed to restrict economic and financial transactions with Iran, i.e., Comprehensive Iran Sanctions, Accountability and Divestment Act of 2010, or CISADA. This or similar legislative developments may further limit our business operations.

Our business could be adversely affected by litigation and regulatory proceedings globally.

We conduct business in many locations in and outside of Japan. We face the risk of litigation and regulatory proceedings in connection with our operations in the jurisdictions in which we operate.operations. For example, if we fail to comply withengage in activities targeted by CISADA, such failure to complythe

2012 NDAA, or other related U.S. statutes or Executive Orders, this could result in the imposition of sanctions by the U.S. government against us. Lawsuits and regulatory actions may result in sanctions of very large indeterminate amounts or limit our operations, and costs to defend either could be substantial. AnMoreover, the Bank and one of its subsidiaries contribute to financial benchmarks such as the Tokyo Interbank Offered Rate (“TIBOR”) and the London Interbank Offered Rate (“LIBOR”) for certain specific currencies. These benchmarks are widely referenced in jurisdictions in which we operate and do not operate. We face or may face some investigations, litigation and regulatory proceedings, and an adverse regulatory decision, judgment or ruling, including in jurisdictions we do not operate in, could have a material adverse effect on our business, operating results of operations and financial condition.

Risks Related to Our Industry

Our liquidity could be adversely affected by actual or perceived weaknesses in our businesses and by factors we cannot control, such as a general decline in the level of business activity in the financial services sector.

We need liquidity to pay our operating expenses, pay interest on and principal of debt and dividends on capital stock, maintain our lending activities and meet deposit withdrawals. Adverse market and economic conditions in the domestic and global economies may limit or adversely affect our access to liquidity required to operate our business. If our counterparties or the markets are reluctant to finance our operations due to factors including actual or perceived weaknesses in our businesses as a result of large losses, changes in our credit ratings, or a general decline in the level of business activity in the financial services sector, we may be unable to meet our payment obligations when they become due or only be able to meet them with funding obtained on unfavorable terms. Circumstances unrelated to our businesses and outside of our control, such as, but not limited to, adverse economic conditions, disruptions in the financial markets or negative developments concerning other financial institutions perceived to be comparable to us, may also limit or adversely affect our ability to replace maturing liabilities in a timely manner. Without sufficient liquidity, we will be forced to curtail our operations, which could adversely affect our business, results of operations and financial condition.

We may incur losses as a result of financial difficulties of counterparties and other financial institutions.

We regularly execute transactions with counterparties in the financial services industry. Many of these transactions expose us to credit risk in the event of deterioration of creditworthiness of a counterparty or client. With respect to secured transactions, our credit risk may be exacerbated when the collateral cannot be foreclosed on or is liquidated at prices not sufficient to recover the full amount of the loan or other exposures due to us. Losses from our investments in and loans to other financial institutions could materially and adversely affect our business, financial condition and results of operations. We may also be requested to participate in providing assistance to distressed financial institutions that are not our subsidiaries. In addition, if the funds collected by the Deposit Insurance Corporation of Japan (“DIC”) are insufficient to insure the deposits of failed Japanese banks, the insurance premiums that we pay to the DIC will likely be increased, which could adversely affect our business and results of operations.

Adverse regulatory developments or changes in government policies economic controls or accounting rules could have a negative impact on our results of operations.

Our businesses are subject to extensive regulation and associated regulatory risks, including the effects of changes in the laws, regulations, policies, voluntary codes of practice and interpretations in Japan and the other jurisdictions in which we operate. The financial crisis has led to calls for significant financial reform measures, and various governments are at different stages of enacting new legislation that will affect financial institutions. FutureThose changes in regulation or fiscal or other policies and their effects on us are unpredictable and beyond our control.

Changes in the regulatory environment may adversely affect our financial condition and results of operations. In particular, the financial crisis has led to calls for significant financial reform measures, and various governments are at different stages of enacting legislation that will affect financial institutions.

In response to the financial and economic turmoil, regulatory authorities have been reviewing and revising capital adequacy guidelines, particularly in relation to quality of capital and accounting standards; such revisions could adversely affect our capital ratios. In December 2010, the BCBS published the Basel III rules text, setting out certain changes to capital requirements which include raising the quality of banks’ capital bases, enhancing risk coverage, inhibiting leverage, reducing pro-cyclicality and introducing liquidity regulation. The changes that the FSA made to its capital adequacy guidelines in response to Basel III, have been generally applied from March 31, 2013.

The FSA’s Financial Inspection Manual for financial institutions and related guidelines are revised or amended from time to time. Our implementation of any such changes could result in an increase in our administrative expenses, which could have an adverse effect on the results of operations and financial condition of us and the Bank.

The FSA and regulatory authorities in the United States and other jurisdictions, along with the United Nations, have in recent years made sanctions as a means to promote the prevention of money laundering and terrorism financing a focus of governmental policy relating to financial institutions. Any regulatory action or change in regulatory focus, whether as a result of inspections or regulatory developments, may negatively affect our banking operations and may require expensive remediation.

In responseThe Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), which was enacted in July 2010, provides a broad framework for significant regulatory changes across most areas of U.S. financial regulations. The Dodd-Frank Act addresses, among other issues, systemic risk oversight, bank capital standards, the resolution of failing systemically significant financial institutions, over-the-counter (“OTC”) derivatives, the ability of banking entities to recent financialengage in proprietary trading activities and economic turmoil, regulatory authorities have been reviewinginvest in hedge funds and revising capital adequacy guidelines, including in relation to quality of capitalprivate equity funds, consumer and accounting standards; such revisions could adversely affect our capital ratios. The new Basel III rules text published by the Basel Committee on December 16, 2010 focus on raising the quality of banks’ capital bases, enhancing risk coverage, inhibiting leverage, reducing pro-cyclicalityinvestor protection, and introducing liquidity regulation.

An increase in the risk weights of resecuritization instruments and some revisions to trading book rules will be implemented from the end of 2011. The minimum common equity and Tier I requirements under the new standards will be phased in between January 1, 2013 and January 1, 2015, and a capital conservation buffer will be phased in from January 1, 2016 and become fully effective on January 1, 2019. The countercyclical buffer requirement will be implemented according to national circumstances and, when in effect, will be introduced as an extensionsecuritization. Implementation of the conservation buffer range. The Basel Committee has also adopted a requirement to ensureDodd-Frank Act is taking place through detailed rulemaking over multiple years by various regulators. Although the loss absorbencyfinal details, impact and timing of regulatory capital at the point of non-viability. On June 25, 2011, the Basel Committee agreed on a consultative document setting out measures for global systemically important banks, or G-SIBs. The assessment methodology for G-SIBs will be based on size, interconnectedness, lack of substitutability, global activity and complexity. It is not yet certain whether we will be designated as G-SIBs. Institutions designated as G-SIBs would be required to meet additional loss absorbency requirements with a progressive Common Equity

Tier I capital surcharge ranging from 1.0% to 2.5% depending on the systemic importance of the relevant bank to be phasedrules remain uncertain, they could result in between January 1, 2016 and January 1, 2019. additional costs, or restrict or otherwise affect the way we conduct our business.

These and further similar, or any other kind of significant regulatory developments could adversely affect our capital ratios and operating results.results of operations. For further details, see “Item 4.B. Business Overview—Regulation.Regulations in Japan,”

We have been preparing for the possible future implementation of these stricter capital adequacy guidelines through various measures. For example, we have issued “Item 4.B. Business Overview—Regulations in United States,” “Item 4.B. Business Overview—Regulations in Other Jurisdictions.” Since those changes in regulation or fiscal or other policies and their effects are unpredictable and beyond our common stock, repurchased and cancelled preferred securities and perpetual subordinated debt, and reserved capital surplus and retained earnings in order to improve the quality and quantity of our regulatory capital. However, our capital policy strategycontrol, we may not be successful. Such implementation could causeable to comply with those changes at all times, despite our capital ratios to be insufficient for regulatory purposes and could lead us to engage in capital conservation measures or may require us to raise more common equity, which may lead to dilution of earnings and lower returns on equity.

The FSA’s inspection manual for financial institutions and related guidelines are revised or amended from time to time. Our implementation of anyefforts. Any such changesfailures could result in an increase inadministrative or judicial proceedings against us, including suspension of our administrative expenses,business and financial penalties, which could have an adverse effect on thematerially adversely affect our business, reputation, results of operations and financial condition of us and the Bank.condition.

We operate in the highly competitive financial services industry.

Deregulation of the financial system, consolidation among financial institutions, diversification within the financial services industry, and the expanded presence of foreign financial institutions and investors have made the Japanese market for financial services market highly competitive. Moreover, competition in overseas markets has intensified due to global consolidation, convergence and alliances among financial institutions. We compete with various types of financial services companies, including:

Government actions, such as those taken to stabilize the market and to alter the regulatory framework, may affect our competitive position. In response to the recent financial crisis, the Government of Japan has taken and may adopt policies, including providing fiscal stimulus or extending credit support to other Japanese financial institutions, thatwhich adversely affect our competitive position. For example,Under the GovernmentPostal Privatization Act (Act No. 97 of Japan submitted a bill to the Diet that would allow2005, as amended), the Japan Post Bank Co., Ltd., Japan’s(“Japan Post Bank”) one of the world’s largest deposit-taking institution,financial institutions, is allowed to expand its business upon notification to and without futurewith prior approval of the government. Increased competition in Japan may put downward pressure on prices for our financial services, cause us to lose market share or require us to incur additional expenses in order to remain competitive. Internationally, various forms of financial support provided by foreign governments to foreign banks and other financial institutions during the current financial crisis may reduce the cost of capital to those institutions and otherwise give them competitive advantages.

There can be no assurance that we will be able to respond effectively to current or future competition.

Damage to our reputation may have an adverse effect on our business.business and results of operations.

Maintaining our reputation is vital to our ability to attract and maintain customers, investors and employees. Our reputation could be damaged through a variety of circumstances, including, among others, employee fraud or other misconduct or unlawful behavior by directors, officers or employees, systems failures, compliance failures, investigations, adverse litigation judgments or regulatory decisions, or unfavorable outcomes of governmental inspections. Negative media coverage of Japan’s bankingfinancial services industry or us,

even if inaccurate or not applicable to us, may have a materially adverse effect on our brand image and may undermine depositor confidence, thereby affecting our businesses and results of operations. For example, actual or rumored investigations of us or our directors, officers or employees, or actual or rumored litigation or regulatory proceedings, or media coverage of the same, may have a material adverse effect on our reputation and could negatively affect the prices of our securities. Actions by the financial services industry generally or by certain members in the industry in Japan can also adversely affect customers’ confidence on the financial services industry. Such reputational harm cancould also lead to a decreased customer base, reduced revenues and higher operating costs.

Other Risks Related

Our failure to establish, maintain and apply adequate internal controls over financial reporting could negatively impact investor confidence in the reliability of our financial statements.

In order to operate as a global financial institution, it is essential for us to have effective internal controls, corporate compliance functions, and accounting systems to manage our assets and operations.

As a New York Stock Exchange (“NYSE”)-listed company and a registrant with the U.S. Securities and Exchange Commission (“SEC”) under section 404 of the U.S. Sarbanes-Oxley Act of 2002, our management is required to assess the effectiveness of our internal control over financial reporting and disclose whether such internal controls are effective. Our Sharesindependent registered public accounting firm has to conduct an audit to evaluate and then render an opinion on the effectiveness of our internal control over financial reporting. The Financial Instruments and Exchange Act of Japan (“FIEA”) also requires us, as a company listed on a Japanese stock exchange, to file, together with our annual securities reports required by the FIEA, audited internal control reports assessing the effectiveness of our internal controls over financial reporting.

We have established internal controls over financial reporting, as well as rules for evaluating those controls, in order to provide reasonable assurance of the reliability of our financial reporting and the preparation of financial statements. However, these controls may not prevent or detect errors. Any evaluation of effectiveness to future periods is subject to the risks that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. To the extent any issues are identified through the foregoing processes, there can be no assurance that we will be able to resolve them in a timely manner or at all. If this occurs, our reputation may be damaged, which could lead to a decline in investor confidence in us.

Our business operations are exposed to risks of natural disasters, terrorism, pandemics and other calamities.

Our business operations are subject to the risks of natural disasters, terrorism, pandemics, blackouts, geopolitical incidents and other calamities, any of which could impair our business operations. Despite our preparation of operation manuals and other backup measures and procedures, such calamities could cause us to suspend operations and could adversely affect our businesses, financial condition and results of operations. Massive natural disasters such as the Great East Japan Earthquake and any subsequent collateral events, may adversely affect economic conditions in general, the financial conditions of our corporate and individual customers and stock market prices, or cause other negative effects, any or all of which could materially and adversely affect our financial condition and results of operations owing to, for example, an associated increase in the amount of credit-related costs or an increase in losses related to our holdings of securities.

Sales of our shares by us or the Bank may have an adverse effect on the market valueprice of our shares and may dilute existing shareholders.

We may issue shares from the unissued portion of our authorized share capital and sell shares held as treasury stock, generally without a shareholder vote. In addition, the Bank may sell any of our shares that it holds. Sales of shares in the future may be at prices below prevailing market prices and may be dilutive.

It may not be possible for investors to effect service of process within the United States upon us or our directors, corporate auditors or othersenior management, members, or to enforce against us or those persons judgments obtained in U.S. courts predicated upon the civil liability provisions of the U.S. federal or state securities laws.

We are a joint stock corporation incorporated under the laws of Japan. Almost all of our directors, corporate auditors and othersenior management members reside outside the United States. Many of our assets and the assets of these persons are located in Japan and elsewhere outside the United States. It may not be possible, therefore, for U.S. investors to effectaffect service of process within the United States upon us or these persons or to enforce, against us or these persons, judgments obtained in the U.S. courts predicated upon the civil liability provisions of the federal or state securities laws. We believe that there is doubt as to the enforceability in Japan, in original actions or in actions to enforce judgments of U.S. courts, of claims predicated solely upon the U.S. federal or state securities laws mainly because the Civil Execution Act of Japan requires Japanese courts to deny requests for the enforcement of judgments of foreign courts if foreign judgments fail to satisfy the requirements prescribed by the Civil Execution Act, including requirements that:

Judgments obtained in the U.S. courts, predicated upon the civil liability provisions of the U.S. federal or state securities laws, may not satisfy these requirements.

Risks Related to Owning Our American Depositary Shares

As a holder of our American Depositary Shares or ADSs,(“ADSs”), you have fewer rights than a shareholder of record in our shareholder register because you must act through the depositary to exercise these rights.

The rights of our shareholders under Japanese law to take actions such as voting their shares, receiving dividends and distributions, bringing derivative actions, examining our accounting books and records and

exercising appraisal rights are available only to our shareholders of record. Because the depositary, through its custodian, is the record holder of the shares underlying the ADSs, only the depositary can exercise shareholder rights relating to the deposited shares. ADS holders will not be able to directly bring a derivative action, examine our accounting books and records or exercise appraisal rights.

Pursuant to the deposit agreement among us, the depositary and the holders and beneficial owners of ADSs, the depositary will endeavor to exercise voting and other rights associated with shares underlying ADSs in accordance with instructions given by ADS holders;holders, and the depositary will also pay to ADS holders dividends and distributions collected from us. However, the depositary is permitted under the deposit agreement to exercise reasonable discretion in carrying out those instructions or in making distributions, and is not liable for failure to carry out instructions or make distributions as long as it acts in good faith. Therefore, ADS holders may not be able to exercise voting or other rights associated with the shares underlying the ADSs in the manner that they intend, or may lose some or all of the value of dividends or distributions collected from us. Moreover, the deposit agreement may be amended or terminated by us and the depositary without any reason, or consent from or notice to ADS holders. As a result, ADS holders may not be able to exercise rights in connection with the deposited shares exercised in the way they wish or at all.

ADS holders are dependent on the depositary for certain communications from us. We send to the depositary most of our communications to ADS holders in Japanese. ADS holders may not receive all of our communications in the same manner as or on an equal basis with shareholders of record in our shareholder register.

4.A.    HISTORY AND DEVELOPMENT OF THE COMPANY

Legal and Commercial Name

Our legal name is Sumitomo Mitsui Financial Group, Inc. Our commercial name is Sumitomo Mitsui Financial Group, or SMFG.Group.

Date of Incorporation

We were established in December 2002.

Domicile and Legal Form

We are a joint stock corporation incorporated with limited liability under the laws of Japan. Our address is: Sumitomo Mitsui Financial Group, Inc., 1-2, Marunouchi 1-chome, Chiyoda-ku, Tokyo 100-0005, Japan. Our telephone number is: +81-3-3282-8111.

History and Development

We were established in December 2002 as a holding company for the Group through a statutory share transfer (kabushiki-iten) of all of the outstanding equity securities of the former SMBC in exchange for our newly issued securities. Upon our formation and completion of the statutory share transfer, the former SMBC became our direct, wholly owned subsidiary. The Bank was established in March 2003 through the merger of the former SMBC with Wakashio Bank, which was established in 1996 as a subsidiary of Sakura Bank. The former SMBC was established in April 2001 through the merger of Sumitomo Bank and Sakura Bank, which was established through the merger of Taiyo Kobe Bank and Mitsui Bank in 1990. Mitsui and Sumitomo started their banking businesses in 1876 and 1895, respectively. The origins of both banking businesses can be traced back to the seventeenth century.

Information Concerning the Principal Capital Expenditures and Divestitures

In October 2008, we subscribed to 48.8% of the shares of OMC Card, now Cedyna, for ¥16 billion and also subscribed to ¥13 billion of OMC Card’s convertible bonds with stock acquisition rights.

In January 2009, we sold 50% of the shares of JRI Solutions, Limited, now JSOL Corporation, to NTT Data Corporation for an undisclosed sum and JSOL became an associate of The Japan Research Institute, Limited.

In July 2009, the Bank invested ¥27 billion to acquire a 51% interest in ORIX Credit, a consumer finance provider which became a consolidated subsidiary of the Bank with ORIX Corporation owning the remaining 49%.

In October 2009, we acquired for ¥565 billion all the operations of the former Nikko Cordial Securities and a part of the operations of the former Nikko Citigroup Ltd., which have since been combined to form SMBC Nikko Securities.

In December 2009, we terminated a joint business with Daiwa Securities Group Inc. and sold to Daiwa Securities Group our 40% equity interest in the former Daiwa Securities SMBC Co., Ltd., now known as Daiwa Securities Capital Markets Co. Ltd.

In May 2010, our wholly owned subsidiary, SMFG Card & Credit, Inc. (“SMFG Card & Credit”), subscribed for a third-party allotment of newly-issuednewly issued shares of Cedyna’s common stock for a total price of approximately ¥50 billion. As a result, Cedyna, previously our equity-method associate, became our consolidatedsubsidiary. In May 2011, SMFG Card & Credit completed a share exchange to acquire the remaining outstanding shares of Cedyna, and Cedyna became our wholly owned subsidiary.

In December 2011, the Bank made SMBC Consumer Finance, formerly known as Promise Co., Ltd. (“Promise”), its subsidiary with the completion of a tender offer for an aggregate ¥71 billion. Following the tender offer, in the same month, we subscribed for a third-party allotment of newly issued shares of SMBC Consumer Finance’s common stock for a total price of ¥120 billion. On April 1, 2012, SMBC Consumer Finance became our wholly owned subsidiary upon the completion of a share exchange of our common stock for SMBC Consumer Finance’s common stock, including the shares which the Bank owned.

On June 1, 2012, the Bank, Sumitomo Mitsui Finance and Leasing Company, Limited (“SMFL”) and Sumitomo Corporation, a non-affiliate, acquired the aircraft leasing business of The Royal Bank of Scotland Group plc, and commenced its operation as SMBC Aviation Capital. The business which we acquired for a total price of ¥93 billion, comprises companies including SMBC Aviation Capital Limited (former RBS Aerospace Limited), SMBC Aviation Capital (UK) Limited (former RBS Aerospace (UK) Limited), and SMBC Aviation Capital Australia Leasing Pty Limited (former RBS Australia Leasing Pty Limited).

On June 29, 2012, the Bank transferred all of its shares of ORIX Credit Corporation (“ORIX Credit”), a consumer finance provider which became a subsidiary of the Bank in July 2009, to ORIX Corporation (“ORIX”). As a result, ORIX Credit is no longer our subsidiary.

Public Takeover Offers

Not applicable.

4.B.    BUSINESS OVERVIEW

Overview

We are a holding company that directly owns 100% of the issued and outstanding shares of the Bank, one of the largest commercial banks in Japan, with more than ¥100 trillion in nonconsolidated total assets calculated as of March 31, 2011.Japan. We are one of the three largest banking groups in Japan with an established presence across all of the consumer and corporate banking sectors. We have four main business segments, consisting of Commercial Banking, Leasing, Securities and Consumer Finance. We changed our business segment information for the fiscal year ended March 31, 2013 in connection with making SMBC Consumer Finance, formerly known as Promise, our wholly owned subsidiary through a share exchange on April 1, 2012. The business segment previously reported as Credit Card is now reported as Consumer Finance, together with SMBC Consumer Finance and other consumer finance companies. For further information on our business segments, see “Item 5.A. Operating Results—Business Segment Analysis.”

Our subsidiaries in our commercial banking businessCommercial Banking segment include, in addition to SMBC, Kansai Urban Banking Corporation (“KUBC”), THE MINATO BANK, LTD. (“The Minato Bank,Bank”), Sumitomo Mitsui Banking Corporation Europe Limited (“SMBC Europe”), and Sumitomo Mitsui Banking Corporation (China) Limited (“SMBC (China)”). Our subsidiaries also include SMFL in our Leasing segment; SMBC Nikko Securities Inc. (“SMBC Nikko Securities”) and SMBC Friend Securities Co., Ltd. (“SMBC Friend Securities”) in our securities business; Sumitomo Mitsui Finance and Leasing Company, Limited in our leasing business;Securities segment; and Sumitomo Mitsui Card Company, Limited (“Sumitomo Mitsui Card”), Cedyna and CedynaSMBC Consumer Finance in our credit card services business.Consumer Finance segment. See “Item 4.C. Organizational Structure.”

Management Philosophy

Our Group-wide management philosophy is as follows:

In addition to our Group-wide management philosophy, we have also established a code of conduct. Our code of conduct is designed to be a guideline for the conduct of our directors, officers and other employees in the realization of our Group-wide management philosophy in all areas. Our code of conduct is as follows:

Environment

The Group recognizesWe recognize preservation of the environment as one of itsour most important management objectives and strivesstrive to achieve harmony with the natural environment in itsour corporate activities.

Basic Philosophy Regarding the Group’s Environmental Activities

Recognizing the importance of realizing a sustainable society as one of itsour most important tasks, the Group makeswe make continuous efforts to harmonize environmental preservation and corporate activities in order to support the economy and contribute to the general well-being of society as a whole.

SMFGWe and itsour principal groupGroup companies have obtained ISO 14001 certification, the international standard for environmental management systems. Every year we set environmental objectives which we systematically pursue through environmental activities based on a PDCA (Plan, Do, Check and Act) cycle. SMFG is also a signatory toWe officially signed the “Statement by Financial Institutions on the Environment and Sustainable Development” of the United Nations Environment Programme (UNEP).in 2002.

The Bank made its Head Officehead office “carbon neutral” and requires land pledged as collateral to undergo soil contamination and asbestos risk assessment. In addition, we also apply the “Equator Principles,” a set of guidelines for financial institutions to assess and manage social and environmental impacts related to the financing of large-scale development projects, when we finance such projects.

Description of Operations and Principal Activities

Commercial Banking

OurWe offer commercial banking business consistsservices to a wide range of customers including individuals, mid-sized companies, small and medium-sized enterprises (“SMEs”), large corporations, governments and governmental entities mainly ofthrough the Bank. The Bank has solid franchises in both corporate and consumer banking in Japan. The Bank has long-standing and close business relationships with many companies listed on the First Section of the Tokyo Stock Exchange and long historical relationships with the so-called Sumitomo Group and the Mitsui Group companies.

The Bank provides an extensive range of consumer and corporate banking services in Japan and wholesale banking services overseas. In Japan, the Bank accepts deposits from, makes loans to, extends guarantees to and provides other products and services to corporations, individuals, governments and governmental entities. The Bank offers financing solutions through loan syndication, structured finance and project finance to large

corporate customers in the domestic and overseas markets, as well as a variety of lendingfinancing options to domestic mid-sized companies, small and medium-sized enterprises, or SMEs and individuals. The Bank also underwrites and deals in bonds issued by or guaranteed by the Government of Japan and local government authorities, and acts in various administrative and advisory capacities for someselect types of corporate and government bonds. Internationally, the Bank operates through a network of branches, representative offices, subsidiaries and affiliates to provide loan syndication, project finance and cash management services and participate in international securities markets.

The Bank conducts its primary banking business through its five business units: the Consumer Banking Unit, the Middle Market Banking Unit, the Corporate Banking Unit, the International Banking Unit and the Treasury Unit. The Bank’s Investment Banking Unit, Corporate Advisory Division, Private Advisory Division and Global Advisory DepartmentTransaction Business Division operate across these business units. Further, the Bank has a Corporate Staff Unit, a Corporate Services Unit, a Compliance Unit, a Risk Management Unit and an Internal Audit Unit.

SMBC’sThe Bank’s Consumer Banking Unit

SMBC’sThe Bank’s Consumer Banking Unit provides financial services to consumers residing in Japan. It offers a wide array of financial services including, but not limited to, personal bank accounts, investment trusts, pension-type insurance products, life insurance products and housing loans.

Consumer Banking UnitThe operations are mainly conducted through a large and well developed branch network. The Bank had a domestic network consisting of 435439 branch offices as ofat March 31, 2011,2013, most of which were located in the Tokyo and Osaka regions.

The Bank has been strengthening this network by transforming branches from transaction centers into marketing bases. The transformation process involves a review of each branch’s infrastructure, based on location and market size, to determine the most suitable functions and physical layout. As of At March 31, 2011, consulting services were available at 73 SMBC2013, 74 of these branches had “SMBC Consulting PlazasPlazas” that provide financial consulting services at convenient locations. SMBC Consulting Plazas provide servicesfor asset management and housing loans during extended hours, including weekday evenings, weekends and national holidays, for the convenience of individual customers. The Bank has broadened its investment product offerings at branches and SMBC Consulting Plazas to include foreign currency bonds, structured bonds and other products.

The Bank also operates an extensive network of ATMs in Japan providing service during extended hours. As ofJapan. At March 31, 2011, the Bank’s ATM network included 6,584 full-service ATMs. In addition,2013, the Bank offers its customerscustomers’ access to 35,01047,084 ATMs, some of which are the Bank’s ATMs and the majority of which are ATMs made available through arrangements with other ATM providers includingsuch as convenience stores.store chains.

The Consumer Banking Unit also offers internet banking services through “SMBC Direct.” As offor consumers. At March 31, 2011, SMBC Direct2013, the Bank’s internet banking services had approximately 1112 million registered users. SMBC DirectThe users are able to transfer funds, perform balance inquiries, make time deposits and foreign currency deposits, and buy and sell investment trusts over the telephone, Internet orinternet, as well as over the mobile phone Internet service.or the traditional telephone.

The Consumer Banking UnitThis business unit offers deposit products, including ordinary deposits and time deposits, and the following products and services through various channels:

customer needs. For instance, the Bank offers a housing loan combined with an insurance policy that covers the repayment of the outstanding loan balance in the event the borrower is diagnosed with certain serious diseases.

•

Investment Trust.Trust. The Bank, as a broker, provides a variety of investment trust products with varying risk-return profiles that are developed and managed by experienced investmentasset management companies within Japan and overseas. The Consumer Banking Unit generally focuses on the distribution, rather than the development or management, of investment trust products. On October 1, 2009, the Bank and its consolidated subsidiary SMBC Nikko Securities, previously known as Nikko Cordial Securities, began providing new investment trust products that were designed to capitalize on new global economic trends.

The Bank also offers the wealth management services to its customers in collaboration with SMBC Nikko Securities and Barclays PLC (“Barclays”). See “—Other Major Group Companies and Alliances—Alliance with Barclays PLC.”

SMBC’sThe Bank’s Middle Market Banking Unit

The Bank’s Middle Market Banking Unit focuses on building a solutionssolution business where it quickly respondsand responding to various issues faced bywhich mid-sized companies and SMEs and provides financial solutions to them. The Middle Market Banking Unitface. This business unit, together with certain of our Group companies, offers customersits customer lending, cash management, settlement, leasing, factoring, management information systems consulting, collection and investment banking services, somethrough 221 sales channels of which are offered in cooperation with our Group companies.

As ofthe Bank at March 31, 2011, the Bank maintained 272 sales channels, including 165 channels which deal with unsecured loans to SMEs, namely “Business Select Loans.”

Loans to mid-sized companies and SMEs are generated mainly through the Bank’s corporate2013. This business offices. Loans originated by corporate business offices can be approved by the general managers of the offices up to a limit which varies depending upon the amount and duration of the loan, the type and amount of collateral and other factors. Loans exceeding these limits are approved by the credit department. Larger loans require the approval of one or more executive officers of the Bank.

The majority of the Bank’s domestic loans to mid-sized companies and SMEs are secured by collateral or supported by guarantees, such as real estate collateral or guarantees by representatives of borrowers or surety companies.

The Middle Market Banking Unitunit also provides the following products and services to mid-sized companies and SMEs:

•

Business Promotion Services.Services for Globalizing Corporations. In light of the recent overseas expansion trend among mid-sized companies and SMEs, of expanding their businesses into overseas markets, this business unitthe Bank focuses on offering products and services that help itswhereby the Bank assists those customers to enter intoentering new markets, especially in China and other Asian countries, and accommodateaccommodates an increase in their international trade operations with the Global Advisory Department.operations.

SMBC’sThe Bank’s Corporate Banking Unit

The Bank’s Corporate Banking Unit provides a wide range of financingfinancial products and services such as loans, deposits and settlement services, targeting large Japanese corporations and listed companies. This business unit also offers business solutions required for the increasingly complex and diverse management issues which large Japanese corporations are currently facing, and supports their active business expansion plans. Loans for the Corporate Banking Unit are approved in the same manner as for the Middle Market Banking Unit.

This business unit, throughwith the Bank’s Investment Banking Unit, provides products and services such as loan syndication, structured finance, commitment lines and non-recourse loans. As part of its solutions services, the Bank intends to promote opportunities for the capital markets to respond to theseits customers’ funding and corporate restructuring needs, particularly through the Bank’s subsidiary, SMBC Nikko Securities.

SMBC’sThe Bank’s International Banking Unit

The Bank’s International Banking Unit mainly helps Japanese corporate customers develop their businesses in overseas marketssupports companies, financial institutions, sovereign/quasi-sovereign entities outside Japan, and helps multinational companies develop their businessesoperating in Japan. TheThis business unit provides a variety of tailored products and services to meet customer and market requirements, including loans, deposits, clearing services, trade finance, project finance, loan syndication and global cash management services.

At March 31, 2013, the Bank’s international network consisted of 1516 branches, seven12 sub-branches and 118 representative offices asoffices. Together with the network of March 31, 2011, creating a presence for the Bank around the world, together withits subsidiaries such as SMBC Europe and SMBC (China). The International Banking Unit offers a variety of services and products to its global clients, including, for example, trade finance, project finance, loan syndication, securitization, shipping finance, global cash management services and yen custody services.

Our overseas lending business has been principally focused on loans to large, highly rated corporations, as well as to sovereign and quasi-sovereign credits, most of which are unsecured. The Bank also makes substantial secured loans overseas, including for project finance, equipment financing and margin lending for securities and commodities. Our overseas loans are generally extended at floating rates based on the London interbank offered rates and denominated in currencies other than Japanese yen.

Loans originated by an overseas branch can be approved by the general manager of the branch up to a limit which varies depending upon the amount and duration of the loan, the type and collateral and other factors. Loans exceeding these limits require approval from the credit department of regional headquarters or the Bank’s head office in Tokyo. Larger international loans require the approval of one or more executive officers of the Bank.

As part of the Bank’s efforts to strengthen its competitive position in Asia, in April 2008,, the Bank established the Asia-Pacific Division in additionseeks to its existing Europe and Americas Divisions. In April 2011, the Bank established the Global Business Strategy Department to enhance initiatives in emerging countries with greater growth prospects and to plan global business strategies with a focusmeet customers’ needs globally.

Based on these countries.

Recently,our strategy of expanding our businesses globally, the Bank has expanded its presence mainly in Asiabeen promoting strategic alliances to enhance products and other emerging regions by establishing new locations and enhancing existing locations across those regions, including:

Recently, the Bank has undertaken the following business alliances:

Moreover, the Bank established the following banking subsidiaries:

Starting with the establishment of Sumitomo Mitsui Banking Corporation (China) in April 2009, we have been expanding our network in China which we consider to be one of the key markets. As of March 31, 2011, Sumitomo Mitsui Banking Corporation (China) had six branches and four sub-branches across China.services.

SMBC’sThe Bank’s Treasury Unit

The Bank’s Treasury Unit operates in the domestic and international money, foreign exchange, securities and derivatives markets to serve customer needs and the Bank’s own asset and liability management requirements.

To further expand the Bank’s customer base, further and to respond to its customers’ increasingly diverse and complex needs, the Bank’s treasury marketing departmentthis business unit also seeks to provide specialized solutions and enhance the Treasury Unit’scustomer service capabilities to serve the Bank’s customers further as a one-stop solutions provider specializing in market transactions.

The Treasury Unit also offerstransactions through the following services:activities:

Others

The Bank through the business units mentioned above, also engages in the following business activities:activities through its business units:

In

Following unit or divisions operate across the five business units discussed above and in cooperation with the Bank’s marketing departments, the Bank also engages in the following business activities:our Group companies, including SMBC Nikko Securities.

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Securities Intermediary Services for Corporate Clients.Clients. The Bank provides corporate clients with securities intermediary services, and offers structured bonds, subordinated bonds and other products to corporate clients in cooperation with its subsidiary SMBC Nikko Securities.

In addition to the Bank, our domestic banking subsidiaries include local financial institutions, such as Kansai Urban Banking CorporationKUBC and The Minato Bank, as well as an internet bank, The Japan Net Bank, Limited (“The Japan Net Bank”). KUBC and foreign subsidiaries,The Minato Bank, as regional financial institutions based in Kansai area, provide commercial banking services to corporations and individuals. The Japan Net Bank, as an internet bank, provides internet-based services such as deposits, loans and investment products.

Our foreign banking subsidiaries include SMBC Europe, SMBC (China), Manufacturers Bank, Sumitomo Mitsui Banking Corporation of Canada, Banco Sumitomo Mitsui Brasileiro S.A., ZAO Sumitomo Mitsui Rus Bank, PT Bank Sumitomo Mitsui Indonesia and Sumitomo Mitsui Banking Corporation Malaysia Berhad. At March 31, 2013, in China there are 15 offices which are composed of 9 branches including the head office and 4 sub-branches of SMBC (China), and one branch and one representative office of the Bank.

On March 1, 2010, Kansai Urban Banking Corporation merged with The BiwakoOur foreign banking associates include Vietnam Export Import Commercial Joint Stock Bank Limited. Biwakoand PT Bank operatedTabungan Pensiunan Nasional Tbk, a retail banking businesscommercial bank in Indonesia, which became our associate in May 2013.

Leasing

Sumitomo Mitsui Finance and Leasing Company, Limited

Sumitomo Mitsui Finance and Leasing Company, Limited (“SMFL”), one of the Kansai area. Asmajor leasing companies in Japan, provides a variety of leasing services including equipment lease, operating lease, leveraged lease and aircraft operating lease. In 2007, SMFL was formed as a result of thisthe merger of SMBC Leasing and Sumisho Lease. We have a 60% equity interest in SMFL, while the remaining 40% is held by Sumitomo Corporation, a non-affiliate.

In November 2010, SMFL established SFI Leasing Company, Limited, a joint business with Sony Corporation, in order to further develop our leasing and rental business.

On June 1, 2012, the Bank, SMFL and Sumitomo Corporation acquired the aircraft leasing business of The Royal Bank of Scotland Group held a 56.1%plc, and commenced its operation as SMBC Aviation Capital. In March 2013, the integration of the existing aircraft leasing businesses of SMFL and Sumitomo Corporation into SMBC Aviation Capital was completed. We and Sumitomo Corporation intend to further expand and develop the aircraft leasing business in Kansai Urban Banking Corporation,Asia and other emerging markets.

Others

In addition to the surviving company. The merger strengthens Kansai Urban Banking Corporation’s service capabilitiesabove companies, our U.S. subsidiary SMBC Leasing and enhances its strategic positionFinance, Inc. engages in the Kansai area throughleasing business, and our associate Sumitomo Mitsui Auto Service Company, Limited engages in the expansion of a stable customer base.auto leasing business.

Securities

SMBC Friend Securities

SMBC Friend Securities is a full-line securities company focusing on retail business. In September 2006, SMBC Friend Securities became our wholly owned subsidiary. SMBC Friend Securities has strengthened collaboration with our Group companies including the Bank. In January 2007, the Bank started to provide fund wrap services mainly to individual customers in collaboration with SMBC Friend Securities. In January 2011, SMBC Friend Securities transferred its businesses conducted in cooperation with the Bank, such as fund wrap services, to SMBC Nikko Securities.

SMBC Nikko Securities

On October 1, 2009, the Bank acquired all the shares of Nikko Cordial Securities, making it a wholly owned subsidiary of the Bank, and Nikko Cordial Securities changed its trade name to SMBC Nikko Securities on April 1, 2011.Inc.

As one of the major Japanese securities brokers,companies, SMBC Nikko Securities has nearly ¥31 trillion of financial assets under account, approximately 7,000 employees, 109 domestic branches, approximately 2.6 million customer accounts and a widely used online trading channel. Inc. (“SMBC Nikko SecuritiesSecurities”), our wholly owned subsidiary, offers a wide range of financial products and investment consultation and administrative services to its individual and corporate customers in Japan. Its offerings include stocks, bonds, investment trustsFor individual customers, SMBC Nikko Securities provides consulting services to meet diversified asset management needs at 109 branches nationwide at March 31, 2013, and variable annuity insurance products.

As part of the acquisition we acquired the domestica widely used online trading tool. For corporate customers, it also offers trading capabilities and financial products, debt and equity underwriting, business of the former Nikko Citigroup. This business underwrites Japanese offerings of a wide range of products, including stocks, convertible and exchangeable securities, investment grade, sovereign and high-yield debt and structured securities and also arranges private placements and engagesM&A advisory services, mainly in other capital raising activities. Under our agreement with the former Nikko Citi Holdings, relationship managers whose industry coverage activities complement the underwriting business (excluding those covering financial institutions and private equity funds) have also been transferred to SMBC Nikko Securities.Japan.

We also acquired shares and partnership interests in other related entities, including Nikko Systems Solutions Ltd., Nikko Business Systems Co., Ltd. and Nikko Global Wrap Ltd. These entities are engaged in various businesses, including fund management, consulting and other securities-related businesses, as well as systems solutions.

In October 2010, SMBC Nikko Securities, launched its Bank Agency Service with the Bank, and in January 2011, SMBC Nikko Securities acquired and integrated the businesses which SMBC Friend Securities had conducted together with the Bank, such as fund wrap services.

During the second half of the fiscal year ended March 31, 2011, Primasia Securities (Asia) Limited (a subsidiary of SMBC Nikko Securities incorporated in Hong Kong), SMBC Capital Markets Limited (a subsidiary of SMBC incorporated in the UK), and SMBC Securities, Inc. (a subsidiary of SMBC incorporated in Delaware) changed their respective trade names toits overseas network, SMBC Nikko Securities (Hong Kong) Limited, SMBC Nikko Securities (Singapore) Pte. Ltd., SMBC Nikko Capital Markets Limited and SMBC Nikko Securities America, Inc. Together with these overseas subsidiaries, we seek(“SMBC Nikko Securities America”), seeks to provide expanded, high quality financial services such as brokerage services of Japanese stocks and M&A advisory services to clients on a global basis. To strengthen our cross border M&A and other advisory services to Japanese companies, SMBC Nikko Securities, the Bank and Moelis & Company, a global investment bank headquartered in New York, established a business alliance in March 2011. In February 2012, we invested approximately $93 million in Moelis & Company to enhance the existing business alliance.

SMBC Friend Securities Co., Ltd.

SMBC Friend Securities Co., Ltd. (“SMBC Friend Securities”), our wholly owned subsidiary, is a full-line securities company focusing on retail business. SMBC Friend Securities has a nationwide network that offers services tailored to the needs of its clients and offers online financial consulting services.

Business Alliance with Citigroup Inc.

In May 2009, we entered into a strategic business alliance with Citigroup Inc. (“Citigroup”) centering on a variety of collaborative activities between SMBC Nikko Cordial Securities and Citigroup. As part of this alliance, Citigroup has

agreed to provideprovides us with access to its global corporate and investment banking networks, including sales and trading services and mergers and acquisitions.M&A services. The long standinglong-standing relationship between Citigroup and the former Nikko Cordial Securities Inc. in the origination and distribution of financial products in Japan and globally will remainis being upheld with respect to SMBC Nikko Securities.

Termination of Our Alliance with Daiwa Securities Group

In December 2009 we terminated our Daiwa Securities SMBC joint business with the Daiwa Securities Group. We sold our 40% equity investment in the former Daiwa Securities SMBC to Daiwa Securities Group, which held the remaining 60%. Through the joint business, which lasted ten years, we engaged in the wholesale investment banking business and provided a variety of financial services to the Bank’s corporate customers. We currently offer many of these services through SMBC Nikko Securities. Upon the termination, we and the Daiwa Securities Group agreed that Daiwa Securities SMBC Principal Investments Co. Ltd., which was a wholly owned subsidiary of Daiwa Securities SMBC, will continue as a joint venture between the Daiwa Securities Group (which will own 60% of the shares) and the Bank (which will own the remaining 40%).

On July 1, 2010, we also terminated our Daiwa SMBC Capital joint business with the Daiwa Securities Group and executed a company split to form SMBC Venture Capital Co., Ltd., which became our consolidated subsidiary, of which we own 40%.

We and the Daiwa Securities Group have confirmed that our longstanding amicable relationship, including the Bank’s status as the “main bank” of the Daiwa Securities Group, will remain unchanged.

Leasing

Sumitomo MitsuiConsumer Finance and Leasing

In October 2006, we and the Sumitomo Corporation Group, a non-affiliate, agreed to pursue strategic joint businesses in the leasing and auto leasing businesses. In pursuit of these objectives, in October 2007, SMBC Leasing merged with Sumisho Lease to form Sumitomo Mitsui Finance and Leasing, and SMBC Auto Leasing Company, Limited merged with Sumisho Auto Leasing Corporation to form Sumitomo Mitsui Auto Service Company, Limited.

We have 60% equity interest in Sumitomo Mitsui Finance and Leasing, and 40% equity interest in Sumitomo Mitsui Auto Service, while the remaining 40% and 60% are held by Sumitomo Corporation.

The purpose of the mergers was to integrate SMBC Leasing’s finance expertise with Sumisho Lease’s expertise in commercial distribution and logistics in order to meet sophisticated clients’ needs and become the preeminent domestic leasing company. The combined companies aim to leverage their know-how and customer bases to provide customers with value-added products and services.

In December 2008, Sumitomo Mitsui Finance and Leasing and Sumitomo Corporation established SMFL Aircraft Capital Corporation B.V., an aircraft operating lease company, in order to develop and expand their aircraft operating lease businesses. In November 2010, Sumitomo Mitsui Finance and Leasing also established SFI Leasing Company, Limited in order to further develop our leasing and rental business with Sony Corporation.

In addition to the above companies, our U.S. subsidiary SMBC Leasing and Finance, Inc. engages in the leasing business.

Credit Card

Sumitomo Mitsui Card Company, Limited

Sumitomo Mitsui Card Company, Limited (“Sumitomo Mitsui Card”) is a leading company in Japan’s credit card industry, having introduced the Visa brand into the Japanese market. Sumitomo Mitsui Card has a strong brand andconducts a comprehensive credit card business with a strong brand, and offers a variety of settlement and finance services to meet diverse customer needs.

In 2005, we,We, Sumitomo Mitsui Card, the Bank and NTT DoCoMo, Inc. (“NTT DoCoMo”) formed a strategic business and capital alliance for the launch of a highly innovativein credit payment service using NTT DoCoMo’s Mobile Wallet, orOsaifu-Keitai, phones equipped with smart-card functions for cashless payments. NTT DoCoMo issuesservice. We have a branded credit card that can be used66% equity interest in conjunction with the Sumitomo Mitsui Card. Sumitomo Mitsui Card, established an infrastructure for mobile credit card payments, includingwhile the installation of terminals at retail shops enabling customers to make payments with mobile wallet handsets. As part of the alliance,remaining 34% is held by NTT DoCoMo acquired 34% of Sumitomo Mitsui Card’s common stock for approximately ¥98 billion, including new shares issued by Sumitomo Mitsui Card in July 2005.DoCoMo. Pursuant to the alliance, Sumitomo Mitsui Card began offeringoffers a credit card payment service using NTT DoCoMo’sOsaifu-Keitai mobile phones under the “Mitsui Sumitomo Card iD” brand in December 2005.equipped with contactless IC chips.

In paymentaddition, Sumitomo Mitsui Card issues a variety of affiliated credit cards in cooperation with partners including, but not limited to, railway companies, airline companies, department stores and settlementretailers to satisfy both these partners’ and cardholders’ needs. Sumitomo Mitsui Card also provides services for electronic money, we are promoting “SMBC First Pack,”customers such as travelers and retailers both in Japan and China, in alliance from 2005, with China UnionPay Co., Ltd., a set of packaged deposit, internet banking and credit card services. We plan to enhance new businesses through initiatives like the October 2008 issuance of the SMBC Card Suica with credit, e-money and ATM card functions, under our alliance with JR East, a large Japanese railway company.bankcard association in China.

Cedyna Financial Corporation

In April 2009, Central Finance and QUOQ merged into OMC Card, creating Cedyna aFinancial Corporation (“Cedyna”) conducts credit card, company. As of March 31, 2011, Cedyna had approximately 23 million cardholders. installment (such as shopping credit and automobile loan) and solution (such as collection outsourcing and factoring) businesses.

Cedyna became aour subsidiary after SMFG Card & Credit subscribed to Cedyna’s third partythird-party share allotment in May 2010. Subsequently, onin May 1, 2011, Cedyna became our indirect wholly owned subsidiary when SMFG Card & Credit completed a share exchange to acquire the remaining outstanding shares of Cedyna.

BuildingIn March 2012, Cedyna made SMBC Finance Service Co., Ltd. (“SMBC Finance Service”) a wholly owned subsidiary. SMBC Finance Service, which had been a subsidiary of the Bank before the reorganization, provides collection outsourcing services and has a strong customer base and internet settlement know-how. Cedyna transferred its own solution business to SMBC Finance Service in order to strengthen its competitive edge by taking advantage of scale and promoting streamlining.

SMBC Consumer Finance Co., Ltd.

SMBC Consumer Finance Co., Ltd. (“SMBC Consumer Finance”), which changed its company name from Promise on July 1, 2012, is a core entity in our consumer lending business. It provides consumer loans that consist mainly of unsecured loans to individuals, and conducts other business including loan guarantee business. SMBC Consumer Finance guarantees certain consumer loans made by the Cedyna integration, we intendBank.

We decided to make SMBC Consumer Finance our wholly owned subsidiary in order to reinforce its consumer lending business, to enhance group synergiesour earnings generation capacity and strengthen collaboration, particularlyto better achieve the expansion of our consumer lending business centered on SMBC Consumer Finance. In December 2011, the Bank made SMBC Consumer Finance its subsidiary with the completion of a tender offer. Following the tender offer, we subscribed for a third-party allotment of newly issued shares of SMBC Consumer Finance’s common stock. On April 1, 2012, SMBC Consumer Finance became our wholly owned subsidiary upon the completion of a share exchange of shares of our common stock for SMBC Consumer Finance’s common stock, including the shares which the Bank owned.

ORIX Credit Corporation

In July 2009, the Bank acquired a 51% equity interest in ORIX Credit Corporation (“ORIX Credit”) as part of a collaborative initiative with ORIX, and ORIX Credit became a subsidiary of the installmentBank. ORIX Credit offered a wide range of card loan products, focusing on a card loan with a low interest rate and solutions businesses. We expect Cedynalarge credit line, and Sumitomo Mitsui Card will deepen their collaboration in their respective credit card businesses.has expanded its business operation by gaining as customers high-income individuals. However, on June 29, 2012, the Bank transferred all of its shares of ORIX Credit to ORIX and as a result, ORIX Credit is no longer our subsidiary.

Others

In addition to the above companies, our subsidiary Sakura Card Co., Ltd. also engagesand our associate Pocket Card Co., Ltd. engage in the credit card business.business, and our subsidiary SMM Auto Finance, Inc. engages in automobile sale financing.

Other Major Group Companies and Alliances

The Japan Research Institute, Limited

The Japan Research Institute, Limited (“The Japan Research Institute”) is our wholly owned subsidiary that designsprovides financial consultation services on management reform, IT, the planning and developsdevelopment of strategic information services, provides outsourcingsystems and consulting services in the fields of management innovationoutsourcing. It also conducts diverse activities including domestic and information technologyinternational economic research and conducts economic research. In July 2006, The Japan Research Institute spun off part of its operations to establish JRI Solutions, now JSOL, which offers information technology solutions to customers in the general industrial, financialanalysis, policy recommendations and public sectors. In January 2009, The Japan Research Institute sold 50% of the shares in JSOL to NTT Data and JSOL became an associate of The Japan Research Institute.

Promise

In September 2004, we entered into a basic agreement with Promise to form a strategic alliance in the consumer finance business. Under the alliance, the Bank and Promise each owned a 50% interest in At-Loan. As part of the business alliance, the Bank and Promise offered, through the Bank’s marketing channels, a variety of products with different interest rates linked to the credit standing of the customer. Promise also guarantees consumer loans made by the Bank.

In January 2010, Promise announced its “Business Structural Reform Plan.” The plan includes:

The plan was completed ahead of schedule via focused restructuring, including significantly cutting selling, general and administrative expenses and terminating unprofitable businesses. In addition, an increase in the authorized number of shares of Promise was approved at its annual general shareholders’ meeting on June 24, 2011.

ORIX Credit

In July 2009, the Bank acquired a 51% interest in ORIX Credit, a consumer finance services provider with a high market share among premium card loan providers, as part of a collaborative initiative with ORIX Corporation. As a result of the transaction, ORIX Credit became a consolidated subsidiary of the Bank.

In March 2011, ORIX Credit entered into a business alliance agreement with Promise regarding loan guarantees.incubation.

Alliance with Barclays PLC

Following an agreement between Barclays PLC (“Barclays”) and the Bank have allied to explore joint business development opportunities, and in June 2008, the Bank acquired newly issued shares of Barclays common stock for approximately £500 million. We also sold euro-yen bonds issued by Barclays Bank through our securities intermediary services in 2009. Discussions with Barclays with respect to collaboration on services to Japanese companies in South Africa through Barclays’ group company Absa were successfully completed in May 2010.

April 2010, Barclays, the Bank and SMBC Nikko Securities established a division in SMBC Nikko Securities in April 2010 to provide wealth management services to high net worthhigh-net-worth individuals in Japan. In May 2010, the Bank entered into a business alliance agreement with Absa Bank Limited, a group company of Barclays, regarding collaboration on services to Japanese companies in South Africa and other African countries. We have intensified our management-level communications with Barclays regarding, for example, the effects of strengthened regulation of the global banking industry. The Bank believes these initiatives will yield mutual benefits and will facilitate business expansion for us in targeted growth business areas, both foreign and domestic.

Credit Loss Protection Agreement with Goldman Sachs

To expand its overseas portfolio and revenue, the Bank entered into agreements with Goldman Sachs in February 2003 to provide credit protection to Goldman Sachs’ extension of credit to their investment grade clients in exchange for receiving a proportion of the fees and interest income from the borrowers. In connection with the agreements, Goldman Sachs established certain wholly owned subsidiaries or the (“William Street Entities,Entities”) that might make credit commitments and extensions. Goldman Sachs entered into credit loss protection arrangements with the Bank in order to hedge in part the credit risk to its investment in the William Street Entities. The Bank, through its Cayman Islands branch, would issue letters of credit in exchange for fees equal to a portion of the fees and interest to be paid by the borrowers to the William Street Entities. The first letter of credit or FLC,(“FLC”), was

issued in February 2003 in a maximum available amount of $1 billion, and is available over a 20-year period, subject to early termination or extension. Also, from time to time over a 20-year period, subject to early termination or extension and other conditions, upon the request of Goldman Sachs, the Bank has issued letters of credit and may issue one or more additional letters of credit (each a second letter of credit or (“SLC Series,Series”) exposing the Bank to risk rated BBB/Baa2 or higher in an aggregate maximum available amount of $1.125 billion). Goldman Sachs may draw on the letters of credit in the event that Goldman Sachs realizes certain losses or (“Specified Losses,Losses”), with respect to loan commitments or loans extended thereunder that Goldman Sachs has entered into with specified borrowers approved by the Bank and Goldman Sachs.

Under the FLC, Goldman Sachs is entitled to draw from time to time amounts equal to approximately 95% of Specified Losses, up to an aggregate stated amount of $1 billion. Under the SLC Series, Goldman Sachs is entitled, subject to certain conditions, to draw from time to time amounts equal to approximately 70% of Specified Losses above specified loss thresholds, up to an aggregate stated amount of $1.125 billion. Goldman Sachs has made a small number of draw downs under the FLC in accordance with its terms.

In connection with these credit arrangements, the Bank pays Goldman Sachs an administration fee based on the aggregate amount of commitments covered by the FLC.

The credit loss protection arrangements contain a number of provisions that give the Bank some control over the determination of borrowers to which it has potential exposure under the FLC and any SLC Series:

The Bank, through a separate bankruptcy-remote Cayman Islands subsidiary, has collateralized the obligations on the FLC and a portion of the SLC Series by buying $1.330 billion of Goldman Sachs demand notes and pledging those demand notes to Goldman Sachs. If Goldman Sachs activates an SLC Series that is not collateralized, the Bank through its Cayman Islands subsidiary will be required to purchase and pledge additional Goldman Sachs demand notes with a principal amount equal to the stated amount of that SLC Series. Subject to certain conditions, the Bank has the right to substitute as collateral high quality liquid securities for the Goldman Sachs demand notes.

These arrangements are designed to collateralize the Bank’s obligations in the event the Bank’s Cayman IslandIslands branch fails to perform on the FLC or any SLC Series, including as a result of our insolvency or the insolvency of the Bank or the Bank’s Cayman IslandIslands branch.

If Goldman Sachs’ credit rating, as determined by either of the two major credit rating agencies, falls below investment grade, Goldman Sachs is obligated to provide collateral to the Bank to support Goldman Sachs’ obligations under the Goldman Sachs demand notes. After an initial 15-year period under the letters of credit, the Bank and Goldman Sachs will negotiate in good faith to extend the terms of the letter of credit arrangements for one additional five-year term. Before the expiration of the initial 20-year term, in certain circumstances, the letter of credit arrangements with the Bank may be terminated by the Bank or Goldman Sachs, in which event Goldman Sachs would be obligated to prepay any outstanding demand notes. In circumstances related primarily

to the creditworthiness of the Bank or a breach of its representations or covenants, Goldman Sachs may draw on the letters of credit for early termination amounts of up to the remaining undrawn or available amount on the letters of credit. In connection with draws on the letters of credit of early termination amounts, Goldman Sachs would have to prepay any outstanding demand notes. Goldman Sachs also would be obligated to pay the Bank on the originally scheduled expiration date of the letter of credit arrangements an amount equal to the early termination amounts minus the Losseslosses that would have been reimbursed under the letters of credit had they not terminated early.

At the time the Bank entered into the above credit protection agreements, SMFG issued Type 4 preferred stock amounting to ¥150.3 billion to Goldman Sachs and SMFG and the Bank entered into a business cooperation agreement with Goldman Sachs. However all the Type 4 preferred stock has been converted to common stock and the business cooperation agreement has expired, except for certain rights which will expire in January 2014.

Management Policies

In May 2011, weWe aim to be a globally competitive and trusted financial services group by maximizing our strength of Spirit of Innovation, Speed and Solution & Execution. We launched a new medium-term management plan in May 2011 for the coming three years from the fiscal 2011year ended March 31, 2012 to the fiscal 2013. Aiming to become a “globally competitive financial services groupyear ending March 31, 2014, with the highest trust” by maximizing our strengths of “Spirit of Innovation,” “Speed” and “Solutions and Execution,” we set two management targetsobjectives as follows:

In order to accommodate global strengtheningThe following four financial objectives and targets were set with the aim of financial regulations, we will continue to enhance our risk-returnimproving and cost-return profiles, while working to steadily expand bottom-line profit. Accordingly, we intend to pursue business opportunities in overseas markets, especially in the rapidly growing Asian market, in addition to maintaining our strong operational base in Japan. With this in mind, we aim to achieve well-balanced and steady improvement ofseeking a balance between financial soundness, profitability and growth, and have set the following four objectives and financial targets to be achieved by fiscal 2013:growth:

Financial Soundness.

Profitability.

Growth.

OverOur basic policy for the next three years, we intendfiscal year ending March 31, 2014 is to implementproactively support the revitalization of Japanese economy through financing and execute focused business strategiesto respond to changes in five critical business areas, establish a solidthe financial base and corporate infrastructure that support those strategies and maximize the powerneeds of our integrated organization as “Team SMFG, Team SMBC”clients and business environment in order to achieve management and financial targets.

Ourmedium- to long-term growth. We also intend to continue to implement following initiatives for strategicthe two strategies—“Proactively contribute to the revitalization of Japanese economy, and as a result, achieve the growth of SMFG” and “Create new business areas include financial consultingmodels and challenge for individuals, providing solutions‘innovation’ in order to make the next leap forward.”

Initiatives for corporations, commercial banking in emerging markets, especially in Asia, broker-dealer services and investment banking, and non-asset businesses such as payment and settlement services and asset management.

Financial consulting for individualsretail customers.. To capture the growing and diversifying wealth management needs of our Japanese individual clients, we intend to further strengthen the financial consulting capabilities of the Bank, SMBC Nikko Securities and SMBC Friend Securities and to increase our assets under management on a Group-wide basis, through such initiatives as

Providing solutions for corporations. To respond effectively and quickly to the management agenda of our corporate clients, including global business expansion and diversified funding needs,advertising aggressively. Specifically, we intend to strengthen our Group-wide capabilities for providing advanced financial solutions by enhancing cross-selling betweenasset management services through trial of banking-securities integrated operation in the Bank and SMBC Nikko Securities, and by integrating the operation ofSecurities. In addition, through utilizing the Bank’s domestictrust business function, we aim to provide one-stop inheritance services to business owners and individuals. Furthermore, we plan to promote Group-wide collaboration in consumer finance business, including overseas offices, through such initiatives as:operations.

Initiatives for corporate clients.

Commercial banking in emerging markets, especially in Asia. To capture expanding business opportunitiesrevitalization of Japanese economy, as well as continue to respond to increasing client demand for support of global business development, we intend to establish a top-tier commercial banking platform in emerging markets centered on Asia by:

Broker-dealer services and investment banking. To addressaccommodate clients’ needs after the global and diversified needs of our corporate clients and the financial needs of global investors, we intend to fortify the business of SMBC Nikko Securities as the principal driverexpiration of the Group’s corporate finance capabilities by:

Non-asset business such as payment and settlement services and asset management.To improve the risk-return profile of our business portfolio,amended). Furthermore, we intend to enhance paymentadvisory functions mainly for large corporations through collaboration of departments with expert knowledge of industries globally.

Initiatives for international business.

We plan to expand businesses in growing areas of worldwide needs including infrastructure finance and trade finance, as well as settlement servicesbusiness and finance business associated with settlement, mainly in Asia where commercial flows are increasing in step with the economic development of the region. We also intend to continue our efforts to secure stable foreign-currency funding in order to accommodate the increase in overseas assets of the Group.

Other initiatives.

We intend to strengthen our non-asset businesses through measures such as collaboration with asset management by:companies within our group as well as those overseas. In addition, we plan to examine businesses utilizing IT and internet on a Group-wide basis.

To enhance the execution of our strategic initiatives, we intend to establish a solid financial base and corporate infrastructure to support sustainable development of our Group-wide and global business, operations by:

As we build upon our foundation as a leading Japanese financial group, in order to respond sufficiently to clients’ financial needs in a timely and effective manner, we aim to establishexpand personnel exchange on a globally competitive business, corporateGroup-wide basis. We also continue to make effort to proactively develop human resource management for women and financial base by focusing on the above five strategic business areas while addressing the impact of new financial regulations and other issues. Despite the challenging economic and regulatory environment, we

aim to respond proactively and flexibly to market changes, and endeavor to increase shareholder value to become a top-tier global financial services group by pursuing the aforementioned management targets and financial targets.locally hired overseas employees.

Revenues by Region

The following table sets forth the percentage of our total operating income under IFRS for each indicated period,the fiscal years ended March 31, 2013, 2012 and 2011, based on the total operating income of our offices in the indicated regions. WeFor each of the periods presented, we earned approximately 90%, 86% and 86%most of our total operating income in Japan, where we compete with other major Japanese banking groups and financial service providers, for the fiscal years ended March 31, 2011, 2010 and 2009, respectively.providers. We earnearned the remainder in the Americas, Europe and Middle East, and Asia and Oceania, where we mainly compete with global financial institutions.

Seasonality

Our business is not materially affected by seasonality.

Sources and Availability of Raw Materials

We are not reliant on any particular source of raw materials.

Marketing Channels

Please see “Item 4.B. Business Overview—See “—Description of Operations and Principal Activities” for a discussion of our marketing channels.

RegulationRegulations in Japan

DeregulationOur businesses are subject to extensive regulation, including the effects of changes in the laws, regulations, policies, voluntary codes of practice and interpretations in Japan. On the other hand, deregulation of banking activities in Japan, and more generally of the Japanese financial system, has proceeded, over the past decade. This deregulation is altering two structural features of Japan’s financial system: (1) the separation of banking and securities businesses and (2) distinctions among the permissible activities of Japan’s two principal types of private banking institutions: ordinary banks (futsu-ginko; including both city banks, of which the Bank is one, and regional banks) and trust banks. We also face competition from some government entities, including Japan Post Bank Co., Ltd. The Government of Japan has begun to privatize or eliminate several government institutions, in connection with which Japan Post in October 2007 became a joint stock corporation, holding shares of four operating companies. However, the current Japanese administration has passed legislation to freeze the postal privatization scheme.

Article 65 of the former Securities and Exchange Act separated the commercial banking business from the securities business in Japan. However, the Bank and other banks in Japan, like their counterparts in the United States, have been seeking authorization to combine traditional commercial and investment banking activities in

order to offer customers a wider range of services. Conversely, securities firms are seeking the authority to engage in activities considered banking activities, which existing regulations prevent them from engaging in. The Development, Etc. of Relevant Acts for the Financial System Reform and the subsequent amendment to the Banking Act now permit banks with FSA approval to establish or otherwise own domestic and overseas subsidiary securities companies to engage in securities businesses. Also, the amendment to the Securities and Exchange Act enacted in June 2004 lifted the ban on banks engaging in securities intermediation. Due to the amendment made as of December 2004 and subsequent amendments, banks have been allowed to solicit customers for securities trades and act as intermediaries with respect to the resulting trades for securities companies.

As a result of the deregulation of the banking sector, companies without prior banking operations have formed new banks. For example, in 2001 banking subsidiaries of Sony Corporation and Seven & i Holdings Co., Ltd. commenced operations to offer consumer banking services. Sony Bank Inc. is an internet-based bank focusing on fund-management services, and its holding company, Sony Financial Holdings Inc., listed its shares on the First Section of the Tokyo Stock Exchange in October 2007. Sony Bank Inc. began offering credit card services in May 2011. Seven Bank, Ltd. uses ATMs installed primarily in Ito-Yokado Co., Ltd. superstores and in convenience stores operated by Seven-Eleven Japan Co., Ltd. as its main service access point. Also, in October 2007, AEON Corporation began operations of a banking subsidiary, AEON Bank, Ltd., which offers retail banking services through in-store branches located in AEON shopping centers.

Within the Japanese consumer banking sector, the deregulation of interest rates on yen deposits has enabled banks to offer customers an increasingly attractive and diversified range of new products. We face competition in this sector from the other city and regional banks as well as from Japan Post Bank, one of the world’s largest deposit-taking financial institutions. Japanese banks have been competing with one another by developing innovative proprietary computer technologies that allow them to deliver basic banking services in a more efficient manner and to create sophisticated new products in response to customer demand. In connection with a significant restructuring of its domestic network, the Bank is replacing many of its retail branch offices with specialized distribution facilities and incorporating advanced technologies to offer new services to its retail customers, for example telephone banking and Internet banking.

Competition in the Japanese banking industry has been heightened by the integration and restructuring of Japanese financial institutions that resulted in larger and more integrated financial institutions. There are a few other major Japanese banking groups, created through this process, and we view them as our principal competitors.

In international markets, we face competition from other commercial banks and similar financial institutions, particularly major international banks and the leading domestic banks in those financial markets in which we conduct business.highly competitive.

JapanSupervisory and regulatory authorities

Pursuant to the Banking Act, the FSA has the authority in Japan to supervise banks, bank holding companies and banks’ principal shareholders, meaning bank shareholders having 20% (or 15% in some cases) or more of the voting rights of a bank. The BOJBank of Japan (“BOJ”) also has supervisory authority over banks in Japan based primarily on its contractual agreements and transactions with Japanese banks. Only companies licensed by the Prime Minister are defined as banks under the Banking Act, and licenses may be granted only to akabushiki kaisha, a joint stock corporation, with paid-up capital of ¥2 billion or more.

The Financial Services of Agency of Japan

Scope of Supervision. The Prime Minister has supervisory authority over banks in Japan, which is generally delegated to the FSA,Financial Services Agency of Japan (“FSA”) except for matters prescribed by cabinet order. The Minister for Financial Services has the

power to direct the FSA. Under the Banking Act, the FSA has supervisory control over banks, bank holding companies and banks’ principal shareholders in Japan, except for matters to which the Prime Minister retains authority.

The FSA’s authority includes approving: